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
Enlightening Conversation. Thank You @Noble100 and your insight it will help me with my 103. BTW I use it occasionally with a PS AUDIO PWD and the Oppo sometimes sounds better without it. I love the OPPO and think it sounds and plays much better than its price point. With the OP's system he/she should have great sound from any music played. Finding where the problem is can be such fun. Not!  But when you do solve the mystery  the rewards are plentiful
I’m new to this thread.  OP, the last paragraph of your original post says it all; the DAC in your Lexicon is hardly state of the art.  Digital has advanced tremendously in the past several years.  With all due respect, all the other comments about power source, ICs, etc. are meaningless unless you improve that glaring deficiency.
  A DAC with HT bypass?  What’s your budget?  I haven’t looked for that feature myself but it shouldn’t be that hard to find.  Another option is to get a better processor with improved DAC; I recently upgraded a10 year old Onkyo AVR in my HT system with an Anthem MXT AVR, with room correction and playback with silver discs using an Oppo 203 as a transport is noticeably better.  Some of the improvement is due to Room correction, no doubt, but the improved DACs must be doing something ...
  to answer the question you pose...would an improved DAC be worth it...I would borrow a DAC (find an accommodating dealer, either on line or a store), plug it into the system, spin CDs for a few days, and make up your mind. Pick one that would be in your budget range.  If you like the improvement, go from there, and if you don’t, you are done
Hello firberger,

     Yes, all the Oppos are excellent and absolute bargains.  It's really a shame they decided to exit the Blu-ray market.  All high quality, very versatile gear with excellent support and customer service. 
     With the BDP-203 and 205 being their last units produced, I think all used Oppo models will be in high demand for years to come with corresponding increases in prices.

Tim
Wow..

A productive thread in which contributors genuinely assisted with the OP’s system concerns and doing so without the usual attitudes being expressed. 

Kudos, to civility!
Greetings celander,

On my planet, we refer to the humans as "Planet Poopers" but we’re still taught from when we’re newts to treat all the poop for brains species in the universe with respect and civility.

Tim