Need Balanced DAC with optical and coaxial inputs for 2 channel home theater system

For my 2 channel home theater system (only), I am considering replacing my Musical Fidelity M1 DAC A with a better sounding DAC.  My needed inputs are one cable box using optical and one Sony Blu-ray player using coaxial.  I need balanced outputs (XLR) to connect the DAC to my Ayre AX-7e integrated amplifier.

The Wyred 4 Sound DAC-2 ($1,500) and the Parasound Zdac DAC ($2,500) are on my review list.  Any comments on these units?  Or, what other DAC's should I add to my list?   Considering my two input sources, will I really get better sound if I replace the Musical Fidelity M1 A DAC?

The sound quality using the Musical Fidelity M1 DAC is much better than than using the cable box RCA outputs direct to the Ayre AX-7e amp (my system is wired using both options using the source switch on the M1 DAC).  

Since the Parasound Zdac v.2 DAC is priced at $2,500 that is my top budget but I really prefer to keep the cost under $2,000.  Your comments and suggestions are appreciated.

I have the essence HDACC.

You can extract high resolution audio from blu-ray and DVD via the HDMI input and output.

As a stand alone DAC, I am very impressed with the sound quality.

That said, there are no returns or refunds as all sales are final. The unit will be replaced for warranty issues only. 
Hi Zipbang, Are you saying that the Essence DAC HDACC allows me to run a HDMI cable from my cable box to the Essence (video & audio) and another HDMI cable fro the Essence DAC to my Pioneer Plasma TV for video?   I would then run balanced cables (XLR) from the Essence to my Ayre AX-7e integrated amplifier for the audio.  Will the use of a HDMI cable from the cable box to the DAC to the amplifier result in higher sound quality (than my optical cables)?   My Sony Blu-Ray player will continue to use a coaxial from the Sony to the Essence DAC for audio (already has HDMI to the TV), correct?

As you have already seen, you're going to get lots of opinions and recommendations. Honestly, there are so many good sounding DACs out there, you're just going to have to narrow it down based on reviews and take a leap of faith, or buy something new from a dealer who has a trial period. 

That said, I will add one more suggestion to the mix: I recently switched from a Parasound ZDAC (which I liked a lot) to a PerfectWave DAC II,  which I absolutely love. I am running it straight into my amp (Parasound Halo A21) and it sounds wonderful. Good luck! 
I'll recommend one more: the Wyred 4 Sound DAC-1 LE with the Femto clock and super cap upgrade options.  At $1,274, it is much less expensive than the DAC-2 DSD SE, but is very similar; no remote option and has a different display.  I do have this and think it is very good, but to be fair, I have not heard the DAC-2 SE.
Thanks again for al the above suggestions.  I have added the Resonessence Labs Veritas DAC to my list ($2,850).  Resonessence Labs latest Audio DAC product, VERITAS, will start shipping shortly.  The Veritas DAC includes the new ES9028PRO series chip.  The VERITAS DAC includes USB Audio 2.0, DSD and DXD, XLR outputs, RCA outputs, Optical input, etc.  The exact specifications are expected to be posted to their web site soon (maybe at the end of the month).

I am going to THE Show in Newport Beach (June 3-5) and hope to audition various DAC's to help me make the right decision.  In any case, I will borrow a DAC to use in my home system to ensure I make the right decision.  Thanks again.