@gdnrbob I agree with you regarding the flexibility argument. No doubt separates gives you the ultimate freedom to upgrade and experiment. If you look at my virtual system you will see that I have, and always had, separate DACs. The Denafrips Terminator 2 DAC that I have is fantastic and I love the sound.
Having said that, I don’t know if the technology in DACs is evolving as fast as we think. Before I got the Denafrips, I was running a Luxman DA-06 which despite being a 12 year old design can still stand up to many modern DACs.
I did briefly try a Hegel H390 and it’s built-in DAC a couple of years ago. At the time, I was not very impressed. I wonder if the outcome would have been different had I tried it with a higher quality external DAC. Who knows?
But regardless, I think the DAC modules that companies like Gryphon, Aavik, Accuphase, and ARC are integrating with their amps are a cut above the rest. If you set aside the flexibility argument for a moment, I think these integrated DACs (as @drrsutliff can attest to) provide excellent SQ since the designers make fewer compromises.