Edorr: Bigkidz didn't get to do all that on my system when he was over (I'll let him give you his thoughts on the things we did listen to), but I have and can answer your questions from my experience over the last two-plus years with the units:
1. When I first got the Sony I listened for the differences between SACD and CD versions of the same disc to be sure I really thought SACD was worth investing in, and occasionally do that now as well to show people the difference. CD is very good on the unit, as far as CD goes, but is clearly not in the same sonic league as SACD or top-notch analog, principally in the areas of ambience retrieval, openness and ease of the presentation, dynamics and overall naturalness of sound. Just the limitation of the medium, I'm afraid. Using the Forsell and Purcell with the Audio Logic DAC narrows the difference a bit, to the point I wouldn't sell that setup for listening to CDs, but still doesn't get me to the point where the same recording on CD sounds nearly as good as the recording on SACD in all the areas mentioned. There are some discs on CD which can come close to SACD sound (Reference Recordings and Harmonia Mundi discs, among a few others) using the upsampler and Forsell, but they still sound artificial to me in terms of ambience retrieval in comparison to a well-recorded SACD disc.
2. I didn't show Bigkidz the difference with the Sony vs. the Forsell as a transport, but suffice it to say I did try them both and am keeping the Forsell (it's nice to keep the Sony in reserve, though, in case the Forsell gets tempermental). Remember, though, that the Forsell is highly tweaked to sound more like analog, with a huge soundstage and a "bloom" around instruments reminiscent of a good turntable (not quite the same, though). The Sony as a transport was good enough, but seemed more clinical, like a Levinson transport, in its presentation, lacking the analog qualities I noted above. If you have a Forsell or CEC transport with your Audio Logic, I don't think you'd want to replace it with the Sony, but if you don't mind the sound of a Levinson or similar transport, it could be a viable alternative sonically, in my view. Although you didn't ask, I'll note that using the Sony as a transport directly into the Audio Logic, without the Purcell upsampler, was very close to the sound of the modded unit playing by itself, probably losing out slightly in terms of bass definition and ultimate resolution, but not to the point where I'd take the time to change around the cables to run the Sony through the external DAC on a disc that the Forsell didn't want to play.
Drubin's question is a good one. I don't care about upsampling for redbook in the Sony because I have the Purcell, and I don't know if Sony is or will be offering it in its SACD players, but I do like its effect when done right on redbook (and I'm talking about the different filters and dither, not oversampling). As far as the better digital side, I just don't know much about what improvements have been made. Admittedly SACD is evolving, but I'm not so sure that the improvements on the digital side are revolutionary at this point, particularly with the focus shifting more to multi-channel reproduction. One possibility is to mod a newer model, but the newer ones I've seen aren't nearly as hefty or overbuilt in their layout as the original SCD-1 and 777ES models, leading me to wonder if other problems, such as isolation from mechanical resonances, etc., might be prevalent in the newer units and offset the benefits of the newer chipset. I know that there are some high-end types of SACD players coming out now (the Lindemann and Musical Fidelity units, for example) which are reputed to offer superb sonics, but I'm still not ready to invest big bucks in the medium until I know it's going to be here for a while, and the modded Sony really is more than good enough to use for the time being, being competitive with the best single-box units I've heard out there. So I don't think there's any really good answer I can give to the question, just my ultimate feeling that a well-modded player will be able to compete with anything out there for the forseeable future.