macbook to DAC to server/cd recorder

Is this scenario possible:

Play an mp3 wave file that is not downloadable on a Macbook connected to a DAC via usb/toslink. Send it to your main system as analog and over to say an olive musica to be stored and burned to a CD?

Essentially you would be going from D to A back to A then D

An example would be a round about way to get internet radio content into your server to replay in your car

Has anyone tried this and does the original content carry digital transfer blocking to prevent this?

I figured if I'm thinking about this someone has already tried it

Sounds like what you're look for is Audio Hijack Pro. This is an app that allows you to record any audio passing through your Mac--a MUCH simpler solution than the one you've proposed.

I've not actually used it, but it is well reviewed in Mac circles, and only costs $32. If you try it, let us know what you think.
I looked into it and from what I can tell there is alot of compression to the digital content.

From the description of the application's features on the website:
Recording Options: Record to MP3, AAC, Apple Lossless, or AIFF audio formats.
Hmmmmm.......AIFF? Apple Lossless?? These don't strike me as highly compressed formats.
For live streams I use Radio Lover, what goes in, comes out, unless you want to change format.....nothing to it really, great for capturing obscure web radio streams and has a some really slick features such as scheduling, auto tag and split tracks on the fly into folders etc.....Which I then burn to disc, transfer to iPOD can easily record over 10 high-quality 128kbps streams at the same time.
* Record MP3 Internet radio streams as individual MP3 songs
* Songs are automatically tagged with artist, album, radio station and track number
* Schedule recordings of your favourite shows
* Record multiple streams at the same time
* Split recordings by song, time, or size
* Import from iTunes Radio Tuner
* Drag and drop MP3 stations from iTunes and the Web (typically these are links that end with .pls)
* International language streams supported
* Supports thousands of Shoutcast compatible and M3U/EXTM3U style radio streams found on popular sites and in iTunes Radio Tuner
* Wake computer from sleep for scheduled recordings
* Assign custom recording styles for each stream

Audio HiJack Pro is also well cool and does exactly what it says on the website, as REL said above...AIFF is NOT compressed dude !
Also think about what you can hear on the road.Who cares if they are compressed?You won't hear it rolling.Besides I'd get a Netbook for Wav files before I spent more for the Olive unless you really want it.My complaint with Olive at this poiint is you can't control external USB drives or I'd say get Olive as a primary player.
I already have the olive but i dont need to use it. It has not been the most reliable. I'll give the others a try but hijack did not sound all that great when I gave it try a while back.