Aragain - You're definitely right that reading the bits from a CD is different than feeding them to a DAC with the proper timing, but feeding the DAC isn't a whole lot different than feeding the mechanics to write data to a hard drive, and that's basically a guaranteed, bit-for-bit correct operation with even relatively cheap hardware. I won't even pretend to understand the output side of a DAC and all the things that could make one sound different that the other, but the input side is a digital interface, and digital data is how I make my living. Again, I don't know a lot about how a DAC is physically constructed, but I don't know why it couldn't be constructed with an input buffer such that you aren't clocking the data directly into the sample space in the DAC that is going to be generated next directly. Feed it into a, say, 8K buffer that in turn feeds the DAC. The buffer could be built right in the DAC chip itself, and I can't imagine arguing that perfect transfer couldn't occur from one part of the chip to another.
Another way of asking the question is why, if I can ship data 100% reliably all the way around the world at data rates MUCH higher than is required for redbook CD playback and recreate the data perfectly at it's destination, can't I engineer a solution to read a CD and transfer that information 100% correctly to another chip in the same physical box? This is especially confusing because I can turn around and do an apparently analogous operation on another electronic device that is cheap and non-optimized.
I've often wondered if high-end transports employ filtering algorithms on the digital data stream they produce. It would be very possible to read the data from the CD, apply a filtering algorithm to the bit-stream, and produce a 16-bit/44.1Khz compatible stream that is intentionally different from what is on the disc. With well executed filtering, you could certainly change the sound, possibly in a way many would prefer. I've never read a reference that explicitly says somebody's transport does this, but I don't see any reason why somebody couldn't to produce a distinctive sound. -Kirk