To DDC or not to DDC. That is the question.

@ted_b - It appears you are correct. The USB input (and many other aspects) of the Mk II that I have was significantly upgraded over the MkI owned by the OP. Improvements affecting the USB input included capacitive galvanic isolation, precision oscillators for low-jitter, more through-hole components for shorter conductor paths and lower USB input signal losses, and PCB layout changes to reduce impedance and improve power delivery.

What I am hearing through USB is likely quite different (i.e., improved) from what the OP would hear, which is another reason that, IMO, the OP's money would be better spent on the upgrade than on chasing improvements due to input changes through a DDC. 

I have been very impressed with the Merason house sound signature and suspect it has much to do with their purposely optimized implementation of the Burr Brown PCM1794 DAC chips that use BB's (purchased by TI) advanced segment architecture which, to my understanding, is sort of a hybrid between multibit (ladder) and delta-sigma technologies. 

I have long used R2R DACs (my other DAC currently is an Aries Cerat Helene, an R2R design using multiple AD 1865 chips) and I find Merason's presentation a nice balance between the musical, natural, full-bodied, and tonally rich sound I enjoy from R2R DACs and the more precise and extended delta-sigma sound.  The Helene plays more grandiose and muscular but, when I am listening to the Merason the sound is close enough that I do not miss those qualities.  I just took the DDC out of the path and reinstalled my USB input directly from my Sonore streamer (using a Cardas High-Speed Serial Buss USB cable) and I perceive a bit more clarity and energy, without losing any of the musical qualities I enjoy. I am actually looking into the DAC2 upgrade, or possibly Merason's new Mountain DAC that I would use to replace both the DAC 1 MkII and the Helene.

Here’s a Hermes from TMR you could return I assume with a relatively small restocking fee if it doesn’t work out that might be worth considering…

https://tmraudio.com/products/denafrips-hermes-ddc-d-d-converter-9

@soix Thanks! 30 day no questions return policy makes this a tempting prospect! My only reservation is that the Hermes has no USB out and the USB input is the strength of the Merason. 

"I have been very impressed with the Merason house sound signature and suspect it has much to do with their purposely optimized implementation of the Burr Brown PCM1794 DAC chips..."

@mitch2 Yes, this and its discrete class A output section in particular, which plays a large role in the overall sound character of any DAC. 

As for what the OP might do, I suspect even a low to mid-tier DDC with SPDIF output might yield an audible improvement depending upon source noise performance (we don’t know what the source is), but I would upgrade this DAC before throwing a lot of money at it. 

@maprik Don't get hung up on USB. If we are correct about your USB card, it's not what you think it is and nothing remarkable. Try the Hermes. 

"Yes, this and its discrete class A output section in particular, which plays a large role in the overall sound character of any DAC." 

@ted_b - Absolutely. I suspect the output section in the Merason is another reason it sounds so good.  I never understood higher end gear that use op-amps in the output. The fact that the Merason is upgradable (to MkII and also to DAC 2) is another value-added feature.