Just to add to your question 2, if you have a decent outboard DAC, you should connect anologue from the DAC to your pre or integrated amp. No need to connect from your DAC to your amp via digital.
As for Q3, if just using the Wadia anologue outputs this is the same as just docking your iPod in any other dock - using the iPods DAC and the sound is nothing special.
I use the Wadia to an Audio Note DAC and then anologue from the DAC to a Musical Fidelity integrated and the sound is as good as my Musical Fidelity CD player. I love the convenience of just parking the iPod and getting excellent sound with the flexibility of using my playlists.
Please see my review posted here on Audiogon on the Wadia dock. I fully agree with Usarmyvet and Ejlif that the quality of sound is wholly dependent on the DAC you use.
As for Q3, if just using the Wadia anologue outputs this is the same as just docking your iPod in any other dock - using the iPods DAC and the sound is nothing special.
I use the Wadia to an Audio Note DAC and then anologue from the DAC to a Musical Fidelity integrated and the sound is as good as my Musical Fidelity CD player. I love the convenience of just parking the iPod and getting excellent sound with the flexibility of using my playlists.
Please see my review posted here on Audiogon on the Wadia dock. I fully agree with Usarmyvet and Ejlif that the quality of sound is wholly dependent on the DAC you use.