Inexpensive, entry-level DACs like the DAC Magic, V-DAC, etc aren't going to hold up against your CD5 IMO. Your CD5 is an excellent player. I'd look no lower than the Rega DAC (I own one and love it), EE, and so on. I haven't heard the Schiit, but I'm sceptical that it belongs in the same class here. I also own a Theta Cobalt 307, which was designed by one of the Schiit guys. I mention that because he said he used a lot of the manufacturing techniques on the Schiit stuff. The Cobalt is rock solid and doesn't appear to have any corners cut regarding build, and still sounds excellent even though it's a 15-ish year old 'dated' design. However, it's not as good as the $1k-ish DACs. Easily as good as the entry level stuff in my system and to my ears though.
I'd expect the Schiit to be built well and sound very good, but I wouldn't expect it to compete with the $1k DACs, which is where you should be focused if you're looking to replace the CD5.
The transport makes a difference, but not nearly as much as the DAC. With my Theta DAC transports made a bigger difference, but with reclocking and stuff (as Elberoth2 said), it's become less important IMO. Spend the bulk of your money getting the DAC right, then experiment with transports.
As far as cabling goes, they also make a difference. Don't dismiss optical because just about everyone has the notion that coax is inherently better. A glass cable can sound excellent and save you a ton of money. My $25 glass cable from Amazon sounds far better than any high end plastic optical cable I've tried. Coax can get a little better, but at a very high cost. Which one you use also depends on the application. Computers, cable boxes, and stuff with a lot of electrical noise have always done better with optical when I tried it.
Just some info.