Zavato, As you've found out, IPad has its limitations as a source, but one interesting trick is to buy the IPad Camera Connection Kit for $29. This gives you a USB connection, with some caveats. An undocumented feature is that this USB will bypass the earphone port and actually stream digital output at a resolution of up to 24/96. I think this goes through some of IPad's onboard Cirrus Logic circuitry.
Then you connect this to a DAC. The DAC must have its own power source, and I don't think asynchronous DAC's will work. I've successfully streamed Pandora Radio and several other radio apps, as well as high-res FLAC files from an IPad into a Bel Canto DAC 3.0. It actually sounds surprisingly good.
That said, most folks seem to use IPads in their system as wireless controllers of a PC or Mac as the source, via DLNA.
There are also a few good articles floating around regarding its use in digital audio.
Good luck!