HDCD needs to happen at the DAC. The only unit I know of that outputs a decoded HDCD signal is the one from Pacific Microsonics itself. You may also want to consider getting the new SACD changer (no SACD vs. whatever wars, please) from Sony and using an outboard DAC (if you _must_ have HDCD, which I do) only when playing HDCD, as it has gotten a very flattering review in Listener magazine.
CD Changer advice
I'm looking into a CD chnager as a replacement to an 11-yr old Sony single player. I'd like to check out HDCD and I can spend about $1K. This presents a few options: First, buy one of the two 'audiophile' integrated units (CAL CL-10 or Anthem CD-1) out there, BOTH of which are now out of production, both of which can be found for around a grand here. Second, pick up a credible mid-fi rig (Denon does a decent HDCD 5CD carousel) and add an outboard DAC (Bel Canto, CAL Sigma 24/96) to it. Any thoughts on either path? Changer or DAC recommenations? Reservations about buying the out-of-production units? Lastly, if I went with separates, would it matter where the HDCD filter is - transport or DAC? I'm not sure if the filter is used during D/A conversion (requiring an HDCD DAC)or if it affects the digital signal picked up as the transport reads the CD (requiring an HDCD transport). Thanks!