DAC with AirTunes?

Can I improve my sound by adding an external DAC to my Airport Express/AirTunes->Arcam AVR300 connection or should I just stick with a direct digital connection to the AVR300? I'm using a Monster AirPort Express Stereo cable(toslink) now and thought about adding a lower priced used(Scott Nixon, Benchmark or Ack!) DAC into the mix. I'd go through the AVR300's analog inputs instead of a direct digital connection. I have some leftover .5 meter Kimber Silver Streak cables that I'd be using for my analog connection so all I'll need is the DAC.

Thanks for any input.
Sorry, I want to clarify here that I'm concerned about possibly improving my two-channel stereo listening by adding an external DAC. The AVR300 has two digital inputs and I'll still be using one(and the AVR300 DACs) for 5.1 listening.
OK, I'm thinking of scrapping my AirTunes for a Squeezebox. Has anyone used this device with good results? How are it's DACs? It seems to have all of the connections and features I need all in one package. Does it work well with Macs?
Asahitoro, there is lots of info on these topics in past threads. I'm not familiar with AVR300 (or any other HT processor), but if you buy an external DAC that is significantly better than the AVR300's DAC, sure, you definitely can improve your wireless music server performance. I doubt that switching from the AXpress to Squeezebox is going to get that kind of gain for you.
Thanks Jayboard.

I've been reading a lot of past posts and am still looking at my options. The AVR300 will let me use stero direct if I connect via analog but not digital so that's one reason I'd like an analog connection. The other reason is can an external DAC sound better for stereo than the AVR300's DACs, which while are good, may be more suited for 5.1? Is that true of most AV receivers? Is there a difference in DAC's for their intended main purpose?

As for the Squeezebox, I like the all-in-one solution if the DACs are that good that I won't need an external DAC. Also, I get a display and an option for a coax connection instead of optical.

Thanks again for the input.
I've been looking for a similar solution. I've read about Scott Nixon's TubeDAC+ which is a low-cost DAC with a tube output stage. There are good threads on A'gon about it. If anyone has any personal experience with it, I'd be interested to hear about it.
Asahitoro, I can't comment much further, because I haven't used the equipment you're talking about. Personally, I'd much rather use iTunes on a laptop on my couch than navigate with the Squeezebox display, but if you are thinking of a Squeezebox as an alternative to being in front of your desktop, then it certainly sounds attractive. But it's a $250 device whose main job is not DAC-ing. I wouldn't count on it to top or even match your Arcam, which I'm sure is a quality piece, let alone rival a dedicated, standalone DAC. I think you're hoping for a free lunch here!
Thanks again Jayboard.

After thinking this out more, I think you're right. I'm cutting corners with the Squeezebox. A laptop w/iTunes is a much better option than the little diplay. Maybe down the road I can find a bluetooth dock w/digital out that will allow me to use my iPod Nano as a remote. That combined with an external DAC would be the ticket. I can still go stereo direct that way and depending on the DAC, I can also take advantage of improving my Sony changer's two channel sound via the external DAC. I'll still keep another digital connection direct to the AVR300 for 5.1.
Don't think you are ever going to be able to use your Nano for a remote... Its a fine device for what it is but... it doesn't have a digital out; it doesn't have the capacity to store any significant amount of non-lossy compressed music; it doesn't have bluetooth; and, even if it had bluetooth, bluetooth doesn't have the over the air capacity to do a digital audio PCM stream.

If you want an iPod interface, maybe the Squeezebox is for you. Gives you a remote and the Squeezebox interface is sort of like the control on the iPods. You can use the digital output of the squeezebox and run that into a standalone DAC for pretty good quality playback. Plus, with a bit of messing around, you can get the slimserver software that the squeezebox uses to "sync" with your iTunes music library, so you are only modding the library with one program....
Thanks for the input Edsilva,

Maybe you didn't read my post correctly. I realize the Nano does not have a direct digital out or bluetooth. I was referring to a *dock* that would have this. Similar to this dock:

Or this:

These would allow the iPod to be used as a remote. The latter needs a digital out but I suppose my Monster mini->optical digital cable may work. BTW, can the Monster cable connected directly to my iPod's heaphone jack allow me to use a digital connection?

You bring up a good point about bluetooth being able to handle it. Maybe there is(or will be) an 802.11g dock that can handle it better. As for the capacity, the 4GB should hold enough and if I need more it's just a quick stroll to my Mac to sync and change things. A bluetooth or 802.11g laptop with more capacity may be able to connect to this dock as well.

I'm going to research these docks more but for now I think I'll just stick to my AirPort Express w/AirTunes directly connected to my Arcam DACs via optical. If I need a display , I can pull out the laptop. That and my Keyspan remote will get me by till I find a better solution.
BTW, can the Monster cable connected directly to my iPod's heaphone jack allow me to use a digital connection?

No. You can't get digital out of an iPod (at least, not without hacking it).

Which should tell you the limitations of those other products you linked to. They re-digitize the analog output of the iPod, send that digital signal to a Bluetooth receiver, which reconverts it to analog (or feeds an external DAC). I seriously doubt what it's transmitting are WAV files. So even if you put uncompressed music on your iPod, you're not feeding uncompressed music to your stereo. On the other hand, it might be good enough to transmit any MP3s/AACs you have on your iPod.

In short, neither of these will give you the quality that AirTunes and your Arcam are giving you right now.
BT runs in the same band as microwave ovens, 2.4 GHz cordless phones, and Wi-Fi. So, even if you could get PCM digital out of a dock, the bandwidth limits of BT are going to kill you.

And, I suspect Pabelson is right--the dock is not going to give you a digital-to-digital path over the air. AE with a laptop is a much better solution. Or a Squeezebox. Stick with Apple Lossless for real stereo use and let the Nano be what it was intended--a device for purely portable use, not critical listening...
My 2 cents.

I use my laptop to stream to my AirPort Express unit and than use the optical output to run a digital signal into a Channel Islands ModWright moded DAC. Than I run the analog signal from the CI DAC to my Marantz 8500 reciever (which I only use as a pre/pro - all amplification is done with sep amps).

This setup sounds CONSIDERABLY better than running the digital directly into my Marantz 8500...which is no slouch in regard to the onboard DACS.