I wouldn't recommend upgrading to a DAC for it. Granted, it would sound better, but the digital out for that model is 48.something (yes, NOT 44 and unfortunately not 96). If you were to modify the input, I'd shoot for a new CD player that does 24/96 HDCD (HDCD is AMAZING). I did add a Monarchy 24/96 DIP to reduce jitter, and I've found the bass to be more tonally accurate and a tad bit deeper. Not a bad $250 upgrade.
I always recommend better speakers to people. I own PSB Stratus Golds and have been auditioning speakers for the last 5-6 months. My electronics are better than yours (EAD Ovation/EAD PowerMaster 2000) and I still can't get the Golds to image right, even though I love their tonal quality. There are tons of better speakers out there to try, including Ariel, Revel, and B&W and many reviews. I strongly suggest you audition everything yourself - do NOT buy them if you haven't heard them. Then look for the desired model used.
You may want to consider maintaining your existing system, which is perfectly good at home theater and adding a new music system. I've been a complete digital nut, but I recently put my hands on a tube set-up and the sound is mind bending...
I always recommend better speakers to people. I own PSB Stratus Golds and have been auditioning speakers for the last 5-6 months. My electronics are better than yours (EAD Ovation/EAD PowerMaster 2000) and I still can't get the Golds to image right, even though I love their tonal quality. There are tons of better speakers out there to try, including Ariel, Revel, and B&W and many reviews. I strongly suggest you audition everything yourself - do NOT buy them if you haven't heard them. Then look for the desired model used.
You may want to consider maintaining your existing system, which is perfectly good at home theater and adding a new music system. I've been a complete digital nut, but I recently put my hands on a tube set-up and the sound is mind bending...