Gfcf, I have owned the HAPZ1 since april. The DSD remastering engine works very well. I have 900 plus albums transferred to the machine. One can turn on and off the DSD engine, and to my ears, conversion to DSD results in a noticeable improvement over flac, ALAC, AIFF, and wav files played back without conversion pretty much across the board. I can't compare the HAPZ1 to other similar devices.
Bill K is correct. The HAPZ1 was not intended to fulfill the function of a DAC. It is my understanding from Dan Wright and others that the HAPZ1 design precludes digital in, unless one is willing to accept a significant sonic compromise.
However, a digital volume control certainly could have been added. That might have been a nice feature for those who are building single source systems around the HAPZ1.