Would adding a Dac improve the sound for my setup?

Ok then I'll give priority to room treatment. Unfortunately I can only treat the front wall behind the speakers, because this is in our master bedroom. My wife doesn't want to see too many things. I'll put a artistic panel behind each speaker and start from there.

Rbc
Always remember, it's much more easy to get forgiveness than to get permission.

My wife liked my Ready Acoustic panels so well she made me buy some more when I moved them to another system. YMMV.

I bought the Rega DAC a few weeks ago. It was a huge upgrade over my Rotel CDP. I'm loving it. Some say it rivals the Rega Saturn, but for way less $$$

Without the benefits of having heard any of your components, a do know from personal experience that upgrading your DAC is one of the best bang for the buck moves you can make, so you would probably get a big boost out of a new $1,000 DAC.

Another suggestion is power conditioning. My best spend $1200 in audio in 2010 was a ps audio powerplant premier. These units will be hitting the used market in high volumes now that PS audio has released the new P5 model. You should be able to pick one up for $1,000.