Keep in mind that the binaural beats community spouts a lot of BS.
That's not where this is coming from. If, as you say, the brain is processing information in the frequency domain, then how would beat frequencies arise? I'm not debunking what you are claiming. That fits what I know about hearing. I'm genuinely curious as to how!
Ah, my apologies. We used to have an RA in my old lab who was a little too obsessed with binaural beats. He claimed he could use mp3's like drugs...
My primary area of study was perceptual consciousness in the visual domain, so I had to look a little more in-depth into binaural beats to answer your question. So, it appears that frequency coding is the norm for higher frequencies, but not for lower frequencies, which are the only ones we can hear binaural beats from. Unfortunately, I wasn't able to find much relevant neuroimaging literature, so I don't really know.
Binaural beats are an auditory illusion, but I'm not sure of what process. The lower frequencies do record phase information, and use that for localization information (comparing phase differences at each ear for a frequency tell you the angle it came in from), so It could be related. Sorry again!
That's not where this is coming from. If, as you say, the brain is processing information in the frequency domain, then how would beat frequencies arise? I'm not debunking what you are claiming. That fits what I know about hearing. I'm genuinely curious as to how!