used high-end DAC or affordable newer model?

It depends. I'm sure you will have some argue both sides. The newer ones have the latest digital section, while the older ones have the better analog section. I personally prefer a older EAD, Sonic Frontiers, or Classe DAC to the newer MSB link III, et al. I think the analog section is the key to a good D/A convertor. The new $1K D/A's just don't have as good of a analog output stage as an older $4-7K D/A convertor. That of course is just my opinion, I'm sure you'll find some who disagree.

I love my Classe' DAC-1. Can be had used for $900-$1000, sold new for $4K, I believe. I agree with Jmc. Its the execution of the design, not the # bits, or upsampling, or whatever, that really makes a difference, IMO.

I tried both approaches and ended up with a used Muse Model 296. They now sell for under $1400 and though their technology is behind the new Muse 192, they were so far ahead when they came out that they still haveup-sampling and other newer features AND a wonderful analogue section. I switched to this from a BelCanto 1.1 and it sounds so much better. It is equally smooth, has better tonal balance and a real sense of palpability. I think HelloSimply Music is selling one on the 'gon currently (I bought mine from them).

As for the LinkDAC III, I have heard it and don't think it is in the same class at all even with all the options.

As, maybe even more important, is your transport. No matter which DAC, it will only be as good as the laser /transport reading/sending signal. Consider soomething like a CEC belt-drive transport/cd player. Later add a hot dac then you've have a world-class digital front end. Northstar has really nice sounding dac that is capable of 24/192 playback.

Electrocompaniet! list $2k, a pure bargain! 24/192!