I have checked this post a few times hoping others would chime in. But here are my experiences in my quest to find a musical redbook CD DAC....and owning the DAC3 along the way. You do not mention the rest of your system. The ARC DAC3 is one product which is not so neutral and therefore system synergy is important.
I had the DAC3 Mk II for about 3 years. The rest of my system was also all ARC: PH2, LS5II/III, VT130/CL150s. Before I got the DAC3, I was using A Pioneer PD65 standalone and then with a Counterpoint DA10 DAC. The DA10 is one of those incredibly neutral and musical products that goes for far less money than anyone in a blind test would ever imagine.
When the DAC3 was used in place of the DA10, some immediate changes were observed: 1) there was a much more "out-in-the-room" presentation with the DAC3 vs the DA10's more laid-back nature; 2) the DAC3 has a more prominent (forward) midrange much like the ARC PH3 phono stage. This along with CardasGoldenCross interconnects was simply too much of a "good thing"; 3) I found the top end to be a little too exaggerated with the DAC3. This initially is appealing but can lead to fatigue quickly if there is too much of this emphasis in the system. The Counterpoint DA10 was a far more neutral product much like the ARC PH2 but of course lacked the magical tube quality that we seek from our music.
Ultimately the DAC3 was just too forward in the context of my system which ironically was all ARC gear driving Magnepan 3.x speakers. The DAC3 does a fairly good job portraying the music's ambience, decay of notes and 3 dimensionality. It simply has a tonal balance that requires careful system synergy. This would be perfect in a solid state based system, perhaps with Levinson gear and Wilson speakers that tends to be so analytical.
After trying other DACs, I found the Electrocompaniet ECD1 to be an incredibly neutral product with surprisingly tube-like sonic qualities. For the same price on the used market today as the DAC3, the ECD1 is a clear winner except for the recent reported bankruptcy of the company. The other redbook DACs that I discovered to be absolutely phenomenol are the Reference models from VTL and Manley. These are the closest to analog that I have heard in that they convey the 3-dimensionality, air and smoothness that only a great tube-based product seems to do. The Manley unit is very rare and in the $3000+ range. This is my reference unit now for over 2 years.
Hope this gives you some insight.