I have the DAC2 and it is a real pleasure to listen to.
I've tried it with three different transports: Sony CD Player, XA7; Linn Ikemi CD Plahyer and Wadia transport. It sounds great with all three--a testament to its neutrality and transparency. It sounded better than the built DAC of the XA7 and the Ikemi.
The Sony needed some power conditioning; the Linn needed none and with the ARC DAC2 was acoustic heaven; finally, the Wadia and the DAC2 was my favorite--for some, maybe a bit too neutral.
With the right power cord, I use Transparent, Rock & Roll has the energy of Rock & Roll and orchestras sound pretty grand also--perhaps as Albertporter notes above, a bit more resolution for really "congested" music might help.
I wonder if the DAC3 folks have had better luck there?
At under $750, the DAC2 is a steal.