Squeezebox upgrade options for $500-600

I've just purchased a Squeezebox Duet system and am having it shipped to my house. I plan on upgrading the squeezebox as soon as it arrives. My budget for my upgrade is about $600 and I am considering two options:
1) Send the unit to Boulder Cable company and get the Enthusiest's Analog upgrade ($425) along with an upgraded power supply ($75 for the power supply and $100 for the upgrade). Total cost = approximately $600
2) Buy the new DacMagic d/a from Cambridge audio ($350) and get the squeezebox d/a converter upgrade ($250). Total cost is the same $600.
Lastly, my amplifier has balanced inputs and only the DacMagic option can make use of this.
I do not plan to use a preamplifier. My other equipment includes an Aragon 8008BB amplifier and B&W 802 series 80(F) Special speakers.
Have you considered buying a Benchmark DAC1 or Lavry DA10. It will cost you a little more but modifying anything may limit your resale value (should you choose to go another route in a year or two)
You ought to live with the thing for a while before you have it upgraded. Otherwise, you'll never know if the upgrade was any good.

Your desire to not use a preamp is important. I'm not sure how the SB does volume control, but it's probably not an ideal solution. What I would do is a get a DAC with a good volume control solution and use the SB digital out into it, and don't bother modifying the SB, at least not initially. For digital out, the SB is really quite good as is. Benchmark and Lavry are good DAC suggestions (I own both), but neither will give you remote control over the volume if that's something you need.
I agree with Drubin.

Keep the squeezebox 'as is' and get yourself a really nice DAC. I own both the Squeezebox and the Transporter. The Transporter has a marvelous DAC which is a bit too analytic for me so at first I piped it into my Audio Aero Capitole's DAC for a certain warm musicality. Now I am using the DAC in my Anthem D2. Both the Squeezebox and the Transporter are great ways to stream music over the web and they interface really nice with my G5 Computer's iTunes. While both the Capitole and D2 are more expensive than you are wanting to spend, there are many really good DAC units for a whole lot less money.
Hi Drubin!

The squeezebox duet has a built in volume control and I've read that it works well when direct connected to an amplifier.
I'll probably listen to your advice and get used to the squeezebox by itself before considering any DAC's.
Forget all of the mods and get a good DAC. The quality output is going to be limited by a lot of factors you can't control. I've been using the Duet with a good Dac for several months and it sounds very good.
Buy the Best digital cable for this setup. The squeeze box stock sound great with the right high end digital cable.
I think it's a waste of money.
If I were you, I would pick up a used Transporter instead of the duet. it won't have the fancy remote, but it will be a better performer. And it has XLR outs and built in volume control. It will most likely be superior to an upgraded Duet in every way.

I really don't understand spending this much on the upgrade for SB3 or the Duet. Another option is to leave the duet stock and add a used Bel Canto DAC2 with a decent digital cable, this may be a money better spent.

I really can't imagine how much can anyone improve the dacs in the SB3 or Duet. Transporter has an excellent built in dac, already decent power supply and big enough screen easily visible from across the room.
Post the same question here
you'll get a different point of view and an answer to your original question.
Buy the Duet instead. Without having to house the display in the same case, its performance should be better.

At least based on how much the noise the stock SMPS introduces. The Duet is considerably quieter inside. (Trust me, I have measured both.)