How to Pass/Record audio output as an input device?
Wow, that was quick...I feel guilty for posting this, but I have been struggling to find an answer so I hope this helps someone else:
Taken from http://ubuntuforums.org/showthread.php?t=1440833 does exactly what I was looking for...tested and working. The term I used to find the solution was "record internal audio" rather than output/input keywords.
To sum it up:
Install pavucontrol (PulseAudio Volume Control) using apt-get or the Ubuntu Software Center.
Open PulseAudio Volume Control. It should be in the applications menu under Sound and Video.
Open Sound Recorder and start recording. Playing any sound at this point would be helpful, as your level indicator should react once you have finished.
Go to the "Recording" tab in the PulseAudio Volume Control window.
Make sure that "Applications" is selected in the drop down menu on the "Recording" tab.
Choose "Monitor of Internal Audio Analog Atereo" from the "Record Stream from" menu in the Sound Recorder entry of the application list.