Ted, I've posted direct answers to your questions to the "whats and whys" about how the Tranquility DAC can playback higher rez files on the AudioCircle post you have participated in. Please read our responses there when you get a chance.
James, the whole purpose we attempted to convey on our website outlining the cryo and regulation trademarks was to show audiophiles the depth of our care for the even the smallest details that other digital manufacturers don't even consider. Basically trying to say; "Hey guys, we've turned over so many new rocks with this Tranquility design, have you ever seen 'chipset cryo' or 'multiple tuned regulation' in another digital product?". Unfortunately, some audiophiles seem to be turned off to the fact we are trying to give them much more than other companies by trademarking these processes.
As far as your USB listening results on your particular dac, we totally agree with your assessments. A little known fact about USB implementation is that there are many dacs where the USB will not be the best sounding input. The Peachtree unit also suffers with its poor sounding implementation too. However, when done correctly, USB is showing up again and again as a superior input scheme sonically compared to the other inputs (when done right of course), That's why we use it! And, we are anything but alone with the finding that USB can be superior sounding compared to the other input choices. A DAC was just named digital playback of the year by Stereophile and it also uses USB. Other DACs are just starting to show up that did careful design with their USB inputs and sound way superior via USB. PLEASE BE PATIENT for this next year to prove out what some of us already know about USB's sonic superiority in certain dac designs.
BTW: We also love great how the iTunes on a Mac is so easily controllable from the iPhone and ITouch. Everyone who has this says they seem to be discovering more music than every before. More music, more enjoyment. Isn't this what it should be about? And it makes music playback more fun too ;-)