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AC97 is just the bus for the sound data. Entirely software driven solutions use it, and so do top end solutions like Creative Audigy or M-Audio 8-channel stuff.
The question is, how much of its own brain does the audio engine IN FRONT OF the AC97 bus have?
Now, chipset sound engines. Intel, most SiS chipsets and older VIA chipsets have a rather stupid, CPU driven one. VIA's current ones as well as ALi's are more capable.
The in/out capabilities (number of channels, digital in/out etc.) then again depend on the codec that's AT THE END OF the AC97 bus. There are six- and even eight-channel codecs that do everything.
Will say, there is no generic answer to "how good is AC97 sound?" - much like there is no answer to "Hof fast is an AGP graphics card?"
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