After looking into it further, I have discovered that it is impossible to transmit data using any sort of frequency shift/phase shift digitally. This was a stupid blunder on my part and now I have decided to do all the computation in the time domain, using two different states (on and off for LEDs).
Below is an updated version of what will need to be implemented.
The input signal will be split into left and right samples (LRLRLRLR) and an N-sample switch will then be used to create a stream data in addition to a pilot pulse which will be added.
This pilot pulse will be used to synchronize the two different Arduino boards such that the correct sample will be directed to the correct left or right speaker. This will be done by checking the magnitude of sample and if the magnitude is greater than V_threshold (given that V_max_signal<V_threshold) we will subtract V_threshold and resync. Otherwise we will bypass the subtraction and simply split the signal back.
The concerns for now is how to actually split the input signal into left and right. Given that the input will be an analog signal we will need to sample (not ZOH) and create a 2D array. Secondly, how will the pass-through be implemented? I will have to look into if there are if-else implementations inside Simulink otherwise I might have to use another voltage controlled switch. However, I’m not sure what threshold voltage should be set, how to determine the incoming voltage, and how to limit the voltage.
The good news is that I am able to get the two Arduino boards to talk to each other. In fact this was all that was needed to get that to work.