You would not get the benefit of the HDCD encoding using the dac in the Cambridge.
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I have a Cary 306/200 CD player/DAC that receives the HDCD into its digital inputs and outputs it that way, but I don't know think you would be getting the same thing by upsampling the redbook layer of an HDCD-encoded disk. I am quite certain that a DAC that does not have onboard HDCD decoding would be able to read that part of the disk. At least in my experience with the Benchmark DAC-1 that was true.