Does a product exist that takes an FM IF signal input at 10.7Mhz and
produces audio output, having employed digital technology for selectivity
and demodulation?

Dig around for some of the "software radio" projects.

http://www.gnu.org/software/gnuradio/gnuradio.html
http://ourworld.compuserve.com/homepages/jmitola/
http://volodya-project.sourceforge.net/SR/sr.php

There are plenty of others.

Basically, you take the IF signal, bandpass filter it down to a
reasonable bandwidth (as required to cover whatever modulation you're
dealing with), and then digitize it. The digitizer needs to have
enough bits of resolution to handle the range of IF signal amplitudes
you're expecting to see (adding an AGC in front can help matters a
lot), and needs to run at a sampling rate which is greater than twice
the IF bandwidth. You don't have to run the ADC at twice the sampling
rate of the IF signal frequency - just at twice its bandwidth
("undersampling").

Then, pull the data into your CPU and use FFT, lapped transforms,
wavelets, or whatever you want/need to do the demodulation.

--
Dave Platt AE6EO
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