No, that won't encode/convert LPCM to Dolby Digital...
- Supports Dolby 5.1, Dolby Digital, DTS and
LPCM 2 channels output through the optical output.
- Supports uncompressed LPCM 7.1,
LPCM 5.1 and LPCM 2 channels output through the multi-channel stereo output ports.
In other words, in "LPCM" mode it will convert 5.1 LPCM from the Wii U to analog and output through the multiple 3.5mm jacks. In "2ch" mode, it will convert only the left and right channels of the LPCM signal and output through optical in the same LPCM format.
Basically, you need a device that both a) accepts 5.1 LPCM through HDMI (or discrete analog channels if using something like what you linked to convert it first) AND b) has "Dolby Digital Live" or "DTS Connect" capability. The only consumer-level devices I can think of that *may* be able to do that would be high-end PC sound cards with the appropriate inputs (HDMI or analog) and of course optical output.
EDIT: This PC sound card may work if its software allows for its multi-channel analog inputs (no HDMI input) to be used a source for DD/DTS encoding:
http://www.asus.com/Sound-Cards/Xonar_D2X/
I'm hoping Nintendo will finally incorporate some sort of surround sound compression vs. LPCM in the Switch, but it's not looking likely.