DAC for Audiotron

I wanted to bump this to the top as I am also interested in this. I currently have a DAC with 3 inputs, which I intentionally bought so I could have it hooked to a transport (in my case a DVD player) and later the Audiotron, or something like it.

My question, can a standard DAC (build for the CD format) perform D-to-A on a MP3 bitstream or does the input have to be from a .wav (which is PCM right?)? Obviously some discs are so poorly recorded that you won't lose much going with a high bitrate MP3 encryption. That would save HD space and make tags easier. But ultimately, I want my collect as .wav's with no losses.

I've got a pair of Audiotrons. One is connected so that the d/a is done by my Theta Casablanca, the other is in my pool room running via the analog RCA outs. The pool room system is fine for background music when I'm drinking beer with friends and shooting 9 ball. There is an "unsubtle" difference compared to the one running into the Casablanca with decently made mp3s (by decently made, I rip my own from my collection using EAC and LAME using "alt preset extreme"). But, its still just for background music when I'm lazy. In response to nbkaye, I'd go with a decent state of the art DAC rather than something 44.1 kHz only; eventually you'll swap it around and hook it to a CD transport or something where you will want the higher resolution.