how can a cheap cd drive equal a fine transport?

The best transports produce a data stream with less error, or jitter.

the above statement is the flaw in your thinking, Lloydc (the jitter part is right tho'). The fact is that even the $35 el-cheapo DVD unit from Walmart will read a disk with zero errors (just like the transport for a $10K CDP). As Al indicated in this thread & Kijanki in another similar thread, these drives are packed with some very effective error correction algorithms that will zero out any errors within a certain range - 2.5mm to 8.5mm as indicated by Kijanki. So, bit stream is going to be perfect with cheap or expensive drives.
Where the expensive drives win big-time is their ability to read the disk with zero errors and at the same time not corrupt the power supply voltage during the read, minimize jitter, prevent disk wobble, etc. All these fine attributes of expensive drives are valid when you are playing back a CD real-time - these attributes prevent "digititis" in the listener.
These attributes are less meaningful when your playback method is computer audio. You've already ack that you understand this bit so no need to repeat. In computer-based audio, you worry about other things: disk speed, ensuring that you bypass KMIXER in Windows, ensure you are doing WASAPI in Win7, USB-to-SPDIF/XLR conversion, etc, etc.

Between 2.5mm and 8.5mm (12,000 bits) CDP interpolates and above it just drops (gaps).

An "error correction" concerning terminology :-)

By definition, "error correction" CORRECTS errors in the data that is read from the cd, producing a bit-perfect result. That occurs routinely and frequently, with both computer data cd's and music cd's, and is performed by the cd drive electronics, invisibly to the rest of the computer or transport which the drive may be part of, and invisibly to the user, and with no adverse effects.

What can cause adverse effects are errors that are severe enough to be uncorrectable. If the software or hardware that is controlling the drive does not make possible the multiple retries that have been mentioned above, or if those retries are not successful, the result may be (depending on that software or hardware) an indication of an error, a refusal to continue any further, a gap in the music, or "error interpolation," which is essentially a guess as to what the data should be, based on the values of nearby samples. If the cd and the drive are in good condition, those things will happen rarely, and certainly FAR less frequently than error correction.

See this Wikipedia writeup, and note particularly this sentence:

The result is a CIRC (Cross-Interleaved Reed Solomon Code) that can completely correct error bursts up to 4000 bits, or about 2.5 mm on the disc surface. This code is so strong that most CD playback errors are almost certainly caused by tracking errors that cause the laser to jump track, not by uncorrectable error bursts.

Best regards,
-- Al

Yeah, a good DAC is where to put the cash. Ripping CDs to the hard drive is the way to go nowadays, apparently the checksum can even be done by comparing to values that can be found online (since lots of people are ripping the same CD).

EAC is the classic choice for a Microsoft OS, and as for Macs there are some choices, I use XLD.

Assuming a decent CD that can be easily read, then the transport can make a difference if the DAC operates as a slave to the transport clock. Only an asynchronous DAC (where there is no connection between clocks) will be totally immune from the type of transport used.

Only if the transport influences the DAC clock in some way can it possibly make a difference. So if a different transport makes a difference then it actually says more about the DAC jitter immunity than the transport.

I recently upgraded from a Marantz SA11 to an Ayre C5Mp , both being used as transport's only , both were run into a Levinson DAC . The Ayre is leaps and bounds a better sounding transport . That being said , I have always felt the transport is at least as important as the DAC . Ernie Fisher used to preach the importance of the transport . So to answer your question , " are fine transports almost pointless now ? " yes , if you don't appreciate good sound .

Computers work differently than CD or DVD transports. With a computer every bit must be right or a program will not run. When a computer program such as EAC rips a disc it reads the data over and over to get every bit correct. A program such as EAC can make a bit perfect copy of a disc. When you play a disc on a transport it plays as it is read. There is no rereading to get the bits right. If the transport can't read a bit it uses error correction to decide what the bit should be.

But computers are not perfect. They have a lot of RF and EM interference. They are also not built as well as a high end transport. Computers also need to be set up properly for audio to sound there best. That said I am not selling my high end CD player any time soon.