I have an Oppo 203, and the DAC is decent, but I only use it as a transport when playing CDs , preferring the DACs contained in my Anthem AVR. If you use RCA cables to connect your Oppo to your Arcam, you are correct in that you will be listening to the Oppo DAC. A digital cable is needed to send a digital feed to the DAC of the Arcam.
The second question is which Digital cable? Should you use HDMI, toslink, coax, or something else? You will get proponents of each here...
My advice is to experiment. Hook up the Oppo to the Arcam with both RCAs and whatever digital cable you have handy. I am guessing that you already have HDMI so that you can use the Oppo as a video player. Listen to the CDs yourself and decide what sounds best. If you wish to try other digital cables besides HDMI, you can get decent cables for around $20
The second question is which Digital cable? Should you use HDMI, toslink, coax, or something else? You will get proponents of each here...
My advice is to experiment. Hook up the Oppo to the Arcam with both RCAs and whatever digital cable you have handy. I am guessing that you already have HDMI so that you can use the Oppo as a video player. Listen to the CDs yourself and decide what sounds best. If you wish to try other digital cables besides HDMI, you can get decent cables for around $20