The Airport Express will output lossless bit perfect digital signals via optical output. You lose nothing by transitting sound this way if you have a good DAC on the receiving end. It will only transmit 16/44.1 and no higher but most music is CD based or less unless you have downloaded higher resolution music to your Mac. If I understand your question, you should consider keeping the AE, stream your music to it from your current Mac, get a DAC for the AE that accepts optical Toslink signals to feed to your pre-amp and you can use all the music you currently have. Steve is correct that you can improve iTunes by using Amarra, or others but you have to configure them to send signals to the AE. You may not be able to tell the difference between iTunes and the others, depending on your system.
Another lame question
Excuse me but I'm not familiar with the capabilities/limitations of a Mac Mini. I've just read about their virtues in music streaming systems. I'm already streaming music from my PC using a Time Capsule as my router to downstairs Airport Express that's wired to my pre. If I replace my Airport Express with a Mac Mini and and DAC, will I still retain the ability to stream music from upstairs to the Mac Mini or will I need addt'l hardware?