OK, more testing. You can change it to just "pcm" and that will create the iso. "lpcm" does not work and I have not determined what the "l" stands for. I will experiment using just "pcm" and fix the Manual document.

There is also a second line in dvd.sh containing "ac3":
<audio format="ac3" lang="en"/>
Shouldn't also "ac3" in this line be replaced by "lpcm"?

If I do so, running the script results in

INFO: default video format is PAL
ERR: Cannot parse audio option 'lpcm'
-----------

dvd.mpg is created and looks ok with lpcm included

But the iso is empty!?