Why would AIFF be better than wav in this context?
AIFF is an uncompressed format native to Mac, whereas WAV is also uncompressed, but native to PC. If you rip to WAV on a MAC it may be more problematic managing metadata like the album artwork or file info should you move your files around. You will notice that you cannot add album artwork, via drag-and-drop, to a WAV file ripped and stored on a MAC in iTunes. WAV files do not support metadata actually - I believe it is stored in iTunes via the software. AIFF files will have no such challenges, and still give you the quality of an uncompressed file format.
To the original poster: You said the sound was garbled via the USB connection to the DAC, whereas the CD direct connection sounds fine. Which DAC are you using? It could have something to do with the USB interface with the specific DAC - the conversion of USB to S/SPDIF. With the CD which interface are you using - Optical or RCA or BNC? Seems to me the USB has to be the problem. A quick experiment if you have the proper cable; on the MacMini run a Toslink (optical cable) from the Mini to your DAC and play the same selections that are giving you problems via USB and see if those problems are still audible. If not, the USB interface is where the problem lies. I believe you'd need a mini-toslink>toslink cable to try this.