Would an external DAC be of any benefit to me?

My primary source is a Western Digital HD TV media player, which is connected to my Onkyo TX-SR706 via HDMI. I have a McCormack DNA 0.5 deluxe connected to the AVR via pre-outs, which is then used to power my Usher BE-718's. With this particular setup the digital to analog conversion is being done by the Onkyo's onboard Cirrus Logic DAC. I'm also using the Onkyo's Audyssey EQ function (i.e. I'm using 'stereo' mode and not 'direct', as this yields an altogether more appealing sound).

I'd just like to know whether I could further improve the audio produced by my system if I added an external DAC between the media player and AVR.

If you are running 2 channel I would recommend California Audio Labs tube dac and McCormack TLC-1 or Micro Line Drive Pre. This combo should beat the Onkyo with no trouble. Buy the best tube you can get from Andy at Vintage Tube Sevices.
An external DAC would be an improvement, but would be even more noticeable if you took the Onkyo out of the chain and went with a dedicated 2 channel preamp with HT bypass.

Even a $400 DacMagic will sound much better than the Onkyo's internal DAC.
YES. If you need theater too, there are some much better receivers and pre's for 2 channel (not to knock Onkyo but...).
Receivers such as B&K or Sony ES will win hands down. Pre's like Anthem, Sunfire or B&K will sound much better. These all have much better built in DAC's.
Thanks for the responses.

I'd definitely consider a pre-amp with HT bypass. I'd need one with a remote as well, though, since I constantly fiddle with the volume while listening to music. Unfortunately the TLC-1, although a fine pre by all accounts, lacks HT bypass and remote.

So I'd either need a pre (with HT bypass and remote) with a built-in DAC, or go for two separate components. I'd need to stick within a $1k budget (used equipment), so any suggestions would be appreciated :)
Yes. Use RCA SPDIF if possible. Most of mankind would benefit from a better DAC.
If you need a remote and HT features go with B&K or Anthem pre/pro used. Add the tube dac and bypass your HT processor for 2 ch. HD media player digital coax out-> Tube Dac-> analog input on pre/pro. Run digital optical cable for HT sound and component video for HD video. HDMI will be out of your price range for these brands at this time. If you are watching 2 channel videos you should be able to configure your outputs for component video with tube dac audio which would actually be an advantage. I don't know that you can select a different audio source if you are on HDMI video input. Worth looking into.
The DAC's in Anthems or B&K are really hard to beat. If you pick up an AVM-2 or AVM-20, they are relatively inexpensive and sound simply amazing for 2 channel. Keep in mind that the zone 2 outputs are NOT as nice quality sounding.
Yeah the AVM-20 is nice although I don't think it is completely jitter proof. I found that a power conditioner helped with this unit. What is nice about the unit is the huge flexibility that is built in ( as well as decent A to D and D to A converters)