Help me set up new stereo system

Great advice from Clio09. If you do decide to go with a Mac Mini there are a couple of things to think about.

Since the latest Mac Minis don't have an optical drive built in you'd need to buy an external drive to burn CDs (there are much cheaper ones than the Apple brand Superdrive) or you could use the drive in the Macbook Pro through wireless sharing with the Mini. The previous generation Minis do have internal drives.

You'll need a monitor to get the Mini set up, either using its HDMI output to a monitor or TV that accepts HDMI, or by screen sharing with the MacBook Pro.

Since the Mini has digital optical output and the Hegel has optical input I would suggest you consider using that rather than USB. USB really wasn't intended for high fidelity music transfer and while it can be very good with the right (expensive) implementation the optical connection might be better. The headphone/analog output jack on the Mini is also an optical digital output. You'd need a mini-Toslink to Toslink cable or a mini adapter for a regular Toslink cable.

If you re-rip files from a CD you've ripped before, iTunes will ask you if you want to replace the file that's already in your iTunes library with the new one. so you won't have duplicates unless you want them.

Whether you'd need more disc storage space than is in the Mini would depend, of course, on how big your library is and the format you choose for ripping but if that is ever a problem you can easily add an external drive or replace the internal drive with a larger one.

You do have backups of your music library, right? Ripping is enough of a PITA without having to do it twice or, in your case, perhaps three times.

I wouldn't be too concerned about trying to replicate all those AAC files at higher resolution. Just play and enjoy them. For your favorite music, the stuff you really, really want to hear at its best available resolution, re-rip the CD or go down the rabbit hole of even higher resolution through downloaded DSD files, but that would add even complexities to your considerations.

Good luck, I don't think you'll regret the effort when it's all done, and the gear you've put together would justify that effort.

You may want to check for ways not to use USB, which in general is of lesser quality than other digital transfer mediums. Some Mac Minis have offered Optical outputs in the past but I'm not sure about the current offerings.
I hate to sound like an arrogant snob--actually I am an arrogant snob, but Ihate sounding like one--but since you have done low bit rate transfers, it probably doesn't matter what decisions you make because there won't be much of a difference. In a way, that is comforting.
I would just use the USB output of your present Computer and learn how to manage files in higher bit rates. When you have more confidence and experience and a larger library of higher res files, then start investigating replay options and technology.

I agree that my library is low quality. But I want to change that and it does not need to be an overnight thing. I don't mind building up my library into high quality/high resolution files. If I need to use my Oppo BDP83 player for a while and buy a few CD's that's OK.

It's really looking ahead, what is the best way to have high quality recordings on a PC/Mac Mini and have the thousands of songs and playlists right at my fingertips via an iPad, etc.

Don't get too caught up into chasing higher resolution files, making you ignore any of the great music you've already accumulated.

I love sitting in front of my Simaudio amp and DAC with Nola Boxer speakers playing CD resolution or higher files but the musical experience is just as satisfying when I'm walking around my neighborhood at 7 a.m. listening to 192k mp3 files from an iPod shuffle with decent earbuds while talking to all the neighborhood cats who are always sitting in their front yards at that time of the day.

It's the music, it's the music. Enjoy what you have.

And if I buy a few high resolution albums from DSD what format will they download in? Will iTunes be OK or should I use something like Jriver or Amarra?

Thanks again for all the help.