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

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! 
-Jon

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.

At THE Show I discovered Prism Sound.  This was the first time I heard of this British company.  I listened to their Callia DAC every day, enjoyed the sound quality and asked them many, many questions.  They were very helpful and answered every question I asked, in detail.  The Callia DAC is fully balanced and includes USB, optical and coaxial inputs.   It also has XLR outputs for connecting to my Ayre AX-7e Integrated Amplifier.  The Callia DAC also has a volume control and a 2nd volume control for a headphone.   Please see:

http://www.prismsound.com/hifi/products_subs/dac1/dac1_home.php

http://www.prismsound.com/hifi/products_subs/dac1/dac1_spec.php

I was very impressed with musical sound quality and also the people from Prism Sound.  I ordered the Prism Sound Callia DAC and it is expected in three weeks (estimated).   

Some of these DAC's mentioned above were not brought to the show, or were damaged in shipment or I did not like their presentations.   I wanted a DAC from a strong, experienced company that would support me and their products.   Of course, the main thing is the DAC had to sound excellent and have the input connections I needed.   These are some of the reasons why I purchased the Prism Sound Callia DAC.   Thanks again for all your suggestions above.