If the DIP outputs an 88.2 or 96 khz signal as a result of upsampling then the DDE V1.1 will not be able to decode it.
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Yes, as long as the DDE has coaxial or BNC/XLR inputs. The DIP Classic outputs 44,1 KHZ signal, and so do older DIPs the superDrive (coaxial and BNC outputs) and the original (coaxial and XLR). I have had excellent results with both the SuperDrive and the Upsampler, and highly recommend trying it out.