I have a Monarchy DIP 24/94 between my Wadia iTransport and my tubed CAL Alpha DAC, and there is no 'hard edge' to speak of (1m Kimber D60 from Wadia to DIP, .5m Orchid AES/EBU from DIP to DAC). Sounds like you've taken car of one of the main considerations in using your iPod as a source, i.e. importing music into iTunes using Apple Lossless format (and not as MP3s). My iPod sounds better as a source than my CAL Delta transport hooked up the same way, which makes no sense to me, but it is what it is.
Keep your eyes peeled for a used DIP - it won't hurt any, and if it doesn't work for you, you can sell it on Audiogon without losing your money on it.
Keep your eyes peeled for a used DIP - it won't hurt any, and if it doesn't work for you, you can sell it on Audiogon without losing your money on it.