What's in your Wadia iTransport system?

I am having a difficult time working out the "hard edge" in my current system: iPod 160gb Classic (lossless) > Wadia iTranport > Cambridge DacMagic > Rotel RSP-976 > Rotel RP-985 MKII > Paradigm Studio 20 v3. The Rotel components and speakers were purchased used on AudioGon, the remaining purchased new. Total investment ~ $2,500. I would appreciate hearing about your iTransport system and investment. Also any suggestions on next-step cost effective improvements on my system. Thanks very much.
I vote you get rid of the Rotel stuff and get a nice integrated amp that matches well with your speakers. The Wadia/DAC magic combo is fine in my opinion.
I have a Monarchy DIP 24/94 between my Wadia iTransport and my tubed CAL Alpha DAC, and there is no 'hard edge' to speak of (1m Kimber D60 from Wadia to DIP, .5m Orchid AES/EBU from DIP to DAC). Sounds like you've taken car of one of the main considerations in using your iPod as a source, i.e. importing music into iTunes using Apple Lossless format (and not as MP3s). My iPod sounds better as a source than my CAL Delta transport hooked up the same way, which makes no sense to me, but it is what it is.

Keep your eyes peeled for a used DIP - it won't hurt any, and if it doesn't work for you, you can sell it on Audiogon without losing your money on it.
What are you using as a digital cable between the Wadia and the Cal Alpha Dac? Maybe this is where the brightness is. Try a few different digital cables first before you get rid of your Rotel stuff.
I've a somewhat similar system in my office and I'd assume it is the Rotel. I bet a tube amp would be spiffy.
I have a 160 GB ipod classic with the Wadia 170i into the DAC section of an CA 840C via Creative Cable Concepts Green Hornet digital cable. This is all going to a NAD C372 int-amp and Polk Lsi 15's. This sound is awesome.
i bought an adaptor from voodoo cable to allow for use of a better pc - lessloss -- and i also use an excellent digicable -- a kharma grand ref. i think a good pc and digicable will help tame your nasties. quite frankly, i have not heard any jitter issues although the itransport allegedly has high jitter.

I have a basic Benchmark DAC hooked up to my Wadia 170i, and the Benchmark driving two channels of a Theta Intrepid amp. Speakers are the Wilson Watt V's. All cables are high end, including a Kimber Select digital (RCA) cable. The combo is quite nice (I think the speakers are overkill, and cheaper priced bookshelves would work fine). The Wadia with an iPod is definitely high end if proper gear is used downstream.