Iphone and DAC question

I am thinking of getting a DAC so my gf can use her iphone with my stereo (I only listen to vinyl). Keeping in mind that all her music is compressed to 128 kbps, I have a couple questions...

If the DAC has 3 inputs- USB, coaxial, and Toslink (I am considering the Jolida FX DAC), and the USB upsamples at 24/96, and the other two are at 24/192, should the coaxial or Toslink sound better than the USB?

And, what cables can I use to bypass the Apple DAC and connect to the external one? I read that Apple makes it difficult to bypass the internal DAC.

Oh, and I realize 128 kbps mp3's will sound crappy either way... I'm just trying to make the most of it.
I am using my iphone5 and my ipad, together with a lighting to usb converter, to send music to various USB DACS. IOS7 will now permit exporting the digital stream. One limitation is that the idevice cannot provide power to the DAC, so if you get a USB powered DAC, you would need to send the USB signal through a powered USB hub. This should not be a problem with an externally powered DAC. There is plenty of conversation about this on computeraudiophile.com.

You still want to get an asynchronous DAC.
Never heard of that site, and I didn't know this... "IOS7 will now permit exporting the digital stream".

Thanks for the info!