Single box or upgrade w/DAC?

I have been using a Electrocompaniet EMC-1 for the past 4 years as a all in one box CDP. My question is the following: I want to up grade my front end & I could use the EMC-1 as a transport or buy a more updated one box solution. I would be willing to spend up to $5,000 for a new or used one box or DAC. Is the transport in the EMC worth keeping? Any suggestions would be appreciated.
There's no simple answer. I recently auditioned three new one-box solutions compared to my current separates. It was pretty much a toss-up. The systems were all under $4,000.

The advantages of separates are that you can spend $5,000 on the DAC alone and then upgrade the transport later. The DAC upgrade will likely make your system perform better. Some recent articles in Bound for Sound also suggest that separates allow you to introduce even more specialized components that help control jitter, etc. The downside is that the signal is traveling through more electronics, but I'm not convinced that's as important in digital as in analog (analog includes the preamp and amp, btw).

If it were me, I'd try some high end DACs to see how they work. I would then upgrade the transport later whenever that is possible. A couple of audiophiles I trust have been absolutely raving about the Teac reference series, so I'd suggest you give that a try (I know ... I never would have thought of them either).
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Others have reported that the EMC-1 makes a good transport. OTOH, there is the clock synch/jitter issue when you go to a two box (which then might easily become a 3 box) solution. Ozfly is correct that you can get pretty good bang for your buck with a separate DAC (esp. if you buy one generation old digital, which has a very steep depreciation curve). You also have the option of upgrading your EMC-1 or going hi-rez.
Steve Nugent at mentions Electrocompaniet mods on his website. He's modded a few digital products for me with clearly audible improvements. Such an upgrade path can save you a bundle. Consider giving him a call.