I vote for a DAC. Great used ones show up all the time. Audio Logic, Chord 64, etc. You'll need a good digital cable.
For a DAC, check out some of the non-os ones that are out there like the Audio Mirror. Many of these go for under $1000 (the Audio Mirror is $500) so that leaves you a lot left over for a really nice digital IC. Also, for a CDP, if you can find a Sony DVP-NS900V, send it to TRL for their modifications and for under $1000 you will have an excellent CDP. Word from CES is that it is one of the most musical CDPs you will hear.