I have limited technical knowledge, but I don't believe you can feed a DTS signal to a DAC (or at least most DACs that I know of) and get sound. But you can always feed it analog signals of course.
All I can say is that if you do love/like/enjoy HT, you will be tempted to upgrade it sooner or later. I personally did sell my center channel and rear center surrounds and used the money towards upgrading my 2ch music system. I do miss the center channel but can live without it. I do miss the rear surrounds on ES/6.1/7.1 sources but I can live without it. I highly caution you against getting rid of your side surrounds and HT processor though, unless you don't watch any action movies. With what you've told us, I would not spend $8000 on the upgrade. Use the money on a separate pre and DAC and spend the rest on a HT processor or receiver(depending on your desired HT performance you can spend anywhere from a couple hundred to a few thousand for essentially top of the line unit) or keep your current unit if you have DD and DTS already and are happy with your current HT performance. Just turn on the Theta when you're watching a movie.
All I can say is that if you do love/like/enjoy HT, you will be tempted to upgrade it sooner or later. I personally did sell my center channel and rear center surrounds and used the money towards upgrading my 2ch music system. I do miss the center channel but can live without it. I do miss the rear surrounds on ES/6.1/7.1 sources but I can live without it. I highly caution you against getting rid of your side surrounds and HT processor though, unless you don't watch any action movies. With what you've told us, I would not spend $8000 on the upgrade. Use the money on a separate pre and DAC and spend the rest on a HT processor or receiver(depending on your desired HT performance you can spend anywhere from a couple hundred to a few thousand for essentially top of the line unit) or keep your current unit if you have DD and DTS already and are happy with your current HT performance. Just turn on the Theta when you're watching a movie.