Simple question, best sounding inexpensive DAC.

Like your reasoning, love the Magnum Dynalab receiver and think your amp/speaker combo will benefit from a dac upgrade. So, I am a big fan of the Eastern Electric sabre chip dacs with lots of inputs, ss or tube (12AU7) output, phase button too, best buy/used for $500. For a bit more, $600, the Metrum Octave is hard to beat IMO. Next stop would be around $1000 for only slightly more, "full sounding", with an Audio Note 2.1. as my choice there but requiring a SPDIF. YMMV.

Slap, Bam, Biff!! Ouch, ZD. So, it's the Elgar/end of discussion? That's pretty harsh from someone with generally good, helpful, informed advice. Frankly, I'd say your's is some of the worst advice, ridiculously inappropriately overpriced overkill. -Not to say the Elgar wouldn't be the best choice for a more expensive system. And, you may still feel it's a bargain....but:
Getting back to being helpful, digital is the area of fastest changes and the price for good sound is dropping "daily". I'll second the Schitt as being a great choice and add the Ifi gear for his strong consideration for this system at a very affordable price. (Further; power distortion corruption considerations do prominently figure in the ifi design.)