Hi Robin,
Re your question about pros and cons, keep in mind that going to a separate transport and dac will not necessarily get you better sound than you would get from an integrated (one-box) cd player, especially within that price range or lower. What it will mainly get you is the flexibility to use other digital sources, such as a computer, in addition to the transport.
I'm sure others will offer suggestions of transport + dac combinations, but if you don't foresee the possibility of using digital sources other than the transport, the following are some well regarded integrated cdp's that I am aware of, which sell new for between roughly $1100 and $3500. Note that one of them can also be used as a dac.
Bryston BCD-1 (this is what I use, and have been very pleased with; about $2.9K new)
Doge 6 (about $1600 new)
Sony SCD-XA5400ES (about $1100 - $1500 new, depending on dealer)
Raysonic (various models; I'm not particularly familiar with them)
Simaudio Moon CD3.3 (this model provides a digital input, allowing it to be used as a dac in conjunction with a computer or other digital source; about $3K new)
Ayre CX-7eMP (about $3.5K new)
Best regards,
-- Al