The basics of PC audio

a) Interference is a very local phenomenon. There's no way to know what will be necessary in your situation. But interference is also far less of a problem than you might imagine. (Think how many TV monitors are adjacent to preamps in home theaters.)

b) Ditto. Probably won't be a problem, but you never know till you try.

c) A wireless network is inherently less stable than a wired one. Cordless phones and microwaves can interfere with the connection. If you go the Express route, I'd connect a standard audio DAC to the audio out, rather than using a USB DAC. But sonically, it's probably a horse apiece in general, though specific set-up issues might be a factor.

d) You can convert an iTunes file (which is AAC, not MP3) to an AIFF file, but it won't be any better than the AAC file. Once a file is compressed with a lossy codec, there is no getting back the information that's lost. OTOH, mediocrity is in the ear of the beholder. For critical listening, you'd want full-resolution digital files (AIFF, WAV, or a lossless codec). But for casual or background use, you aren't going to notice that it's "only an MP3."

e) I don't know the USB DAC market well, but the only thing I'd worry about is noise. Assuming you can get adequate S/N from today's models, future improvements will be marginal.

The one weakness of the Express is jitter. (Jitter gets far more attention than it deserves, but in this case it's not just a theoretical concern.) Feeding the audio out digitally to a DAC would be better than using its analog output. Whether that improvement is worthwhile, given that you're already dealing with compressed files, is something you'll have to judge for yourself. I use my Express mostly to stream Internet radio, which is REALLY compressed, so a little jitter hardly matters. YMMV.

I'd agree that at 192kbps, compressed files start to put up a real fight. But Matt was talking about iTunes Store downloads, which are 128kbps. They aren't quite so clean, though perfectly adequate to my ear for casual listening.

John Atkinson measured very high levels of jitter in the analog output of the AE:

http://www.stereophile.com/accessoryreviews/505apple/index.html

See Figure 7, and the text surounding it.

Reclocking is part of the DAC's job. If you have a DAC that does not reclock, you have a defective DAC. The DAC in the Express just doesn't do it very well, which is why he recommends using an outboard DAC instead. I suspect the DAC in even a low-end A/V receiver would be sufficient to do this properly, though I can't claim any personal experience on this.

I should say that I don't use an external DAC with mine, but then I use it mostly to listen to Internet radio streams, which are highly compressed, so I'm not looking for perfect reproduction. Even so, I don't find it at all unlistenable.

I think it's true that there have been a few DACs made that did not reclock the data. This is what we call "defective by design." Reclocking data is how you eliminate jitter; it's a necessary step. And as I said, even the DACs in AV receivers do it.

Not being an engineer, I may have expressed myself badly (and thanks to Steve for setting me straight), but I was responding to a question about how adding a DAC could reduce jitter coming from an Airport Express. Implicit in that question is the idea that the bytes are supposed to come streaming down the digital cable exactly 1/44100 of a second apart. They don't, and yet DACs manage to produce an analog signal without audible jitter. That's part of their job.