My advise, listen to both setups and decide for your self. I would expect, however, that the setup would sound better using the DAC of the Rotel.... but you never know until you try it. Good luck
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Thanks for the responses and good advice - yes I figured the Rotel might be better although I've heard that the DAC in the Squeezebox is pretty decent all things considered. The Rotel is a few years old while the DAC is newer in the Squeezebox - I'm not sure if DAC technology has really advanced that much in the past few years :) I will sample both and see if I hear any differences.
From my experience, the DAC in my NAD was preferable to that in the squeeze box. The NAD had a smoother more enjoyable sound, though the Duet had a bit more detail at the expensive of harshness.
On a side note, I love my Duet - it is easily the best piece of gear (of any hobby) I have in recent memory.