At what point is an external D/A converter warranted or beneficial


Over the years and after multiple "upgrades" I've become disillusioned with digital audio reproduction. As my systems improved in quality/resolution, the digital audio quality has equally deteriorated to where most listening is now done in analog. This makes my CD collection of in excess of 1000 titles pretty much useless. My digital D/A conversion knowledge is pretty much limited to whatever is done by the internal D/A converter of the equipment. That being a Lexicon MC12B processor and Oppo BDP103. As my choices of ICs went from basics to high quality resolution improved with a marked decline in digital SQ. I'm at a point where any Redbook CD presents a harsh, edgy, shrilly, bright, name it what you want, upper frequency. Changing ICs back to basic cables attenuates this along with resolution of the music played. You might say I'm at a loss. Do I live with less resolution or the digital limitations. I do not have this issue playing analog media. Would an external D/A converter be beneficial or a waste of money? 
Systems are: B&W 803D2 and surrounds,  Lexicon MC12B, Oppo BDP 103, AQ Columbia ICs XLR & RCA,  AQ Digital ICs,  Tara Labs speaker cables,  Rogue Pharaoh, VPI Prime . Analog front end shares the L/R front speaker and input from the Oppo. 
Is there such a thing as an external D/A converter for a H/T setup as the Lexicon processor is the oldest piece in the chain with most likely the weakest D/A converter. But how would that connect to avoid the internal processing.
Any suggestions or recommendations?

128x128gillatgh
gormdane and gillatgh,

     I have an Oppo 105 and use a similar configuration with my combo 2ch and ht system.  I connect all of the 105's outputs directly to my amps (center, sub and rear surrounds via rca cables and the mains via xlr cables) and the sq and convenience are very good.
     My only reservation is that the 105 was specifically built as a step up in audio quality from the 103 even though they're both identical in video quality.  I know the 105 uses expensive Saber dac chips on all channels and the 103 uses Cirrus Logic dac chips on all channels.  The 105 has no harshness or brightness issues but I'm not as familiar with the 103's sq. and hope it's to gillatgh's liking. 
     Considering Oppo's commitment to high quality, I tend to doubt they'd use the Cirrus Logic dac chips in the 103 if it resulted in bright or harsh audio.  
     Since gillatgh's Rogue Pharoah integrated combines a tubed preamp section containing two long-plate 12AU7 tubes combined with a Hypex OEM class D amp section, I find it unusual that this combination would produce a sound that would be described as anywhere close to bright or harsh.  I've also never read any comments on the 103's sound as having a bright character on either cd or Blu-ray playback.
     Overall, I still expect the system configuration I suggested to provide a well balanced sound but, worst case if some brightness remains, there are some other options left to explore.

Tim
@noble100, some things I've tried so far trying to isolate the issue. 
1. At Oppo 103 Swapped digital IC from optical AQ to coaxial AQ Haweye which resulted in an increase of high frequency brightness using HT Lexicon. No change noticed using the Rogue.
Note: connection to Rogue is via analog out of Oppo where the Oppo internal DAC is doing the conversion. There is some hf brightness but not as pronounced. I think the Rogues tube section is attenuating the hf signal.
Also noted that this hf anomaly is isolated to digital only not an issue during analog playback. Also streaming from Spotify or Pandora directly from Smart TV seems to be no issue. However when using the Pandora app in the Oppo the brightness returns. I have yet to get to trying your suggestion as that will take more effort and time. 
Ps. The Lexicon processor has never exhibited this phenomenon prior to the Oppo introduction. 
A point I forgot to mention, playing back a DVD thru the Oppo (concert, both BR and standard) exhibit none of the hf issues encountered when playing Redbook CDs. My issue seems to be limited to CD playback. Playing DTS cds also do not exhibit any hf issues.
Very strange!
Hello gillatgh,

     Yes, it is a bit strange but it's not brain surgery, right? 
     I no longer believe the Lexicon MC12B is the source of your issue.  It seems, in your current setup, you only use its internal dac chips for ht processing and you use the 103 for cd playback connected directly to the Rogue.

    However, I'd still suggest removing it because it's unnecessary and using the 103 for surround decoding, and connecting its outputs directly to your 5 ch amp, will likely be a significant improvement for ht sound quality and it'll streamline your system to just the necessary gear.
     Once you get the time to reconfigure and setup the 103 as the 5.1 processor, there are some other features on the 103 you can explore. 
     Things like the audio processing setup screens where you set the size ('small' for sub assistance or 'large' for no sub assistance) and relative volume of each of the 5.1 channels, the cutoff frequency for bass sent to your sub and how you want 2ch stereo cds to be processed and outputted.  You could get a head-start on this by reading these sections in your 103 manual. 
     I'll monitor this thread and await updates.

Tim
      
 
@ noble100 and all that contributed,

Tim, in two words, YOU ROCK!!! 
Reconfigured my system as you recommended, also read the Oppo manual, with a slight change. Instead of using the Oppo as the preamp I kept the Lexicon in the loop. Configured as follows, removed the digital connection completely and connected the Oppo to Lexicon via analog out to 5.1 analog in connection on Lexicon and set Lexicon setting input to analog bypass so the Lexicon DAC is bypassed and processing is done by the Oppo. Only loss to this configuration is inability to convert 2Ch into Lexicon proprietary surround modes. Quite ok with that as I do have the ability to just change a setting if I want to use them.
Now for the result.........WOW no more harshness, brightness etc at high frequencies, open airy superb. Much more defined and clear. Extra bonus my SACD and DVD A disks now also play. I'm thrilled and really a happy listener.
Redbook CD'S are sounding great like never before. I may have to change my mind about digital. Analog still has what I'll just call some ambience that digital is missing but in the big picture the convenience of digital is a worthy contender.

Thanks to all who took time to make suggestions. All of you are superb music affectionados but Tim, noble100, absolutely had the best and most cost-effective solution. Great ideas and info.
My problem is solved. Again thanks to all.