DACs with a budget of $800

It sounds to me like you're very much describing the sound (and limitations) of your preamp.  In his Soundstage review John Crossett found the 21.1 to be darker and more forward with less depth in direct comparison to an ARC SP16.  I don't see much sense in adding a DAC to improve air and depth when your preamp is working against it downstream.  So, while I'd definitely agree adding a good DAC would be a very good idea, I'd audition and potentially replace your preamp first.  I think you'll be surprised at the difference will make in your system as you have a pretty neutral amp and speakers that are certainly capable of portraying excellent depth and air.  

Just for two examples FWIW, if I were you I'd take a hard look at a used Backert Rhumba or maybe a Don Sachs or Tubes4HiFi SP14 and try to hear one (or something similar) in your system.  Just my $0.02 and best of luck. 

Ben
For about $900 you can get a Bel Canto DAC 2.5 , And you will probably never look back.

I bought a new DAC 2.5 for $2200 a few years back. I hit hard times, sold it, then I bought another one used for $900 b/c I Realized how good they were for the money.

The DAC also has a built in PreAmp with Volume control. These Bel Cantos are hi res, musical, fast, big soundstage, and clean-sounding with incredibly low distortion (Bel Canto uses high end anti-jitter components and clocks).

The 2.5 DAC would most likely mate well with your red dragon amplifiers. For $900, it’s a steal.

@Soix  .. Apologies.. a misstep on my part: 

i do do not get my Blue Circle preamp until next week. Currently I am using an NAD 165C Bee. I know I may experience big changes, and maybe the ones I am looking for... but keep the recommendations coming!!! 

@graber thanks for the recommendation.. I will look into it...