A Bel Canto DAC2 can be had for under 1k. I am currently using a Bel Canto 1.1. Both accept RCA and toslink (optical).
The Bel Canto is very smooth and transparent to the point of almost vanishing. I was using a Krell component before which although had great bass, sounded very brittle (to my ears anyway).
See the blue moon review of the bel canto... superb