My own solution is quite similar to what you are considering.

I bought a used Benchmark DAC1 that was purchasd new in April of this
year. The seller guaranteed me that it is in "new" condition.  It
arrives on Wednesday.

I will be running:

server side decoding of my FLAC files via "Slimserver" >> gigabit
ethernet >> Squeezebox2 >> a custom single ended digital coax cable >>
DAC1 >> analog out into amplifier >> speakers  (no Pre, Pro or
Receiver!)

The dig-coax connector on the DAC1=BNC and on the SB2=RCA, so I am
having a short BNC to RCA cable made so I do not have to use an
'adapter'.  *shudder* ;)

I wired my house using all CAT6 components and Belden bonded pair CAT6
cable, so will obviously use this as opposed to WIFI.  I did get the
wireless version of the SB2, just to have the added flexibility
however.

My FLAC files were encoded from lossless WAV (using the EAC ripper and
the FLAC encoder).  The sound should be stellar as I now have perfect
bit-4-bit sound decoded via an awesome DAC, and pumped directly to my
speakers via an Anthem amplifier.  I will also eventually be getting a
tube amp (on loan from a good friend), and will do some thorough
listening test once the setup is complete.


-- 
Jetlag
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