Dolby Labs were clever enough not to try encoding four channels into two.
They only encoded one, the rear channel. This is why it works.

The rear information is phase encoded into the L and R channels so that 
it is 90
degrees ahead of the L channel and lacks 90 degrees of the R channel.
The rear channel information phase difference between the L and R 
channels is
180 degrees.

The front center channel isn't actually a separate channel at all. The 
Dolby Stereo decoder wasn't very good at this, but the Pro Logic decoder 
is very clever.
It outputs to the center speaker only such information that is equal in 
level and phase
between the L and the R channels. It is the mono information of the 
stereo signal.
It isn't a separate channel because the decoder outputs to the center 
speaker also all
mono information that is included in the stereo signal that you put into 
the L and R
channels. However, that doesn't matter, because the center is the point 
where the
mono information actually should come from! In fact the Pro Logic 
decoder fixes
partly the directional distortion that listeners sitting off-axis have.

The decoder also feeds all antiphase content that was fed into the L and 
R channels
into the rear speakers, but in practise the amount of antiphase 
components in music
or sound effects is very small.

Dolby Stereo encoding is very robust. You can even swap the L and the R 
by mistake,
but the Pro Logic decoder still decodes C and R signals into the correct 
If you do the same with any matrixed quad recordings, the decoding 
doesn't work right.