Thanks all. After reading online that the combination of the Apple Losses, iTunes and Airport Express with the Monster Toslink was a bit perfect combination, I decided to go spring for the couple of hundred dollars to test out the theory. By the way - I'm using an old iMac as the computer now (Mac -- Digital Signal Mover (U24, Airport Express) -- Benchmark Media DAC-1, Threshold T200 Class-A, B&W 803s).
Finally, the stage opened up! I can do a relatively quick A/B/C comparison now:
A) U24 Waveterminal going through digital coax to my Benchmark DAC-1
B) Apple Airport Express going through digital optical to my Benchmark DAC-1
C) My CD player going through digital optical to my Benchmark DAC-1.
I have the equalizer turned off in iTunes, along with any Sound Enhancement and Sound Checking.
Without some kind of ASIO driver that can use Apple Lossless Codec - there is still a huge difference between Option A and Option C. It's not as bad on the Mac as it was on the PC, but it is clearly there. The big impact is on the shape and size of the soundstage. The stage is flattened out and squashed wih Option A. The actual sound quality appears good - so if you're not sitting in the sweet spot, it's not that noticable. If you are, it's pretty clear. For some reason, Option A also seems to attenuate the bass part of the music a bit.
Comparing the Airport Express (Option B) against the CD (Option C) yielded much better results. The stage opened up huge and wide and deep. The quality of the sound was indistinguishable to my ear between these options. I have a few songs that I like to use to test stage size (e.g. Crazy by Barenaked Ladies from their album Gordon). It's not my favorite song, but they were monkeying around with the stage size and it expands well beyond the speakers. The Airport Express Option clearly was nailing this song.
Finally, a good sign that we're not doing a lot of processing on the Mac - the volume control is greyed out. I optimistically named the AIrport Express Base Station 'Bit Perfect'. I think it may have earned its title.
I will try out Foobar / ASIO / Apple Lossless when it comes out on Beta - I can do that easily with the U24 -- PC on A and the Airport Express -- Mac on B. I'll keep an eye on that and report back to everyone when it comes out.
Daryll.