I have done something very similar, but have beeen unpleasantly surprised with the results in my setup. My normal source is a DVD player (coax out). I am also using a G4/400 running OS X with an M-Audio Audiophile 24/96 card (also coax out). Both feed into a Tact RCS 2.0 and from that to a Musical Fidelity DAC. I record all my CD's as uncompressed AIFF files.
The files from the computer sound markedly worse than the same CD played through the DVD player! Not as bad as MP3 but more digital sounding. Bits are supposed to be bits but I am not sure that iTunes is allowing the file to go through unaltered. OS X has a digital audio subsystem called Core Audio which manipulates digital audio files in 32/96 resolution but iTunes forces a downconversion back to 16/44 which I think is causing the problem. This is just ahunch, but I do have another data point: when I play CD's through another program (Whamb) I can use the Mac as an upsampler and output in 24/96. It sounds awesome! Only problem is Whamb's interface is not nearly as good as iTunes (which I love) and it does not play AIFF's, only CD's and MP3's. any suggestions?
