PS Audio Perfect Wave DAC upgrade to DSD?

Lots of good advice, thanks all.  About a year ago, after putting this first system together, I came up with the following long term plan, based in part on other posts and responses and reviews etc, with the goal being to slowly improve SQ altogether and hopefully reduce the high end smear.  I know that the most direct route might be to replace the speakers, but I also wanted to learn through experience how other changes could affect SQ through the Thiels. 

Here's the plan - 
1) upgrade power cords, receptacles, maybe the conditioner.  I have done all I plan to do there, but the posting above might make me reconsider a different conditioner (would love a PS Audio regenerater but I think SQ/$$$ will be relatively low compared to other improvements, at least at this point).
2) Work on room treatments - this is an ongoing work in progress. I have absorption at primary reflection points, including a heavy wool carpet, added isolators for the speakers and components, ditched the rack and coffee table, read some Jim Smith, etc. This has helped tremendously and I've got a few more improvements lined up over the next 4-6 weeks.
3) Upgrade the source (hence this post) to the best in my budget.  I bought the PWD with the DSD upgrade in mind.
4) Don't mess too much with cables, interconnects, or preamp - I think these are fine tuning adjustments best done when the components are in place, kinda the icing on the cake.  Although seriously thinking about a Supra Cat 8 ethernet cable for the DAC's bridge.
5) Either upgrade speakers or the amp - I am leaning toward higher efficiency speakers, but it will take me a while to figure out which ones, Zu, Joseph, Devore are all contenders but I have heard none of them auditioning will be very hard, hence the choice to do #3 first.

If you're otherwise happy with the speakers, I would consider upgrading the crossovers in your Thiels.  Better capacitors on my speakers (Duelund CAST Tinned Copper on Coincident PREs) eliminated some light smearing and brightness/sibilance in the highs.  There are some threads on Agon documenting the process for Thiel speakers, and I think Jim Thiel's son will actually help you with the process if you contact him (it either happened in the Thiel owners thread, or those folks will know how to contact him).

I'm clearly getting a different experience than others, but I've upgraded my PWD MKII to a DSD twice and both times ended up going back.  I don't know what it is about the DSD that doesn't work for me, but that's been my experience.

cal3713 - talk about striking a chord!  The first response I got when I posted on the Thiel Users thread was an enthusiastic "upgrade your crossovers!"  Tom Thiel (Jim's brother), Beetlemania, a couple other happy modders are fine tuning the design(s) and one day this upgrade might be available through a tbd company or Coherent Source, the post OEM repair/parts/service provider for Thiel.  If I a) had a second pair of speakers and b) knew how to solder, I would be in with two feet bc the trial runs are showing excellent results.

The Thiel thread is one of my favorites - excellent history, design, and anecdotal info re all things Thiel, mostly provided by Tom Thiel himself; lots of good user tips (best amp pairings, how do I fix...., relative virtues of the different models, etc), and although some might perceive small bits of smuggery about the users' preferred speakers, there is NONE of the trolling that sometimes enters into online hifi discussions.  And I have come to trust the listening, interpreting, and writing skills of many of the contributors. Highly recommended and one of the reasons I want to stick with the Thiels!     

All that being said, bummer about the PWD vs DSD - you are the first I have heard having this experience.  What changes for the worse?  

Whoops, should have just gone with "relative" rather than guessing son!  Glad you posted the correction. As for the dsd, obviously many people love it, maybe most. For me, it just doesn't sound natural. Don't know if it's my speakers or what, but I don't hear what everyone else does... and I tried twice.

And I wouldn't be too scared of soldering. Since you won't be putting heat directly on a driver, I doubt you could do anything to hurt your speakers. The worst case scenario is that you over cook a new crossover part, and those odds are low. You don't happen to be in Colorado do you? Happy to help upgrade if you are...

I wish, sadly no, and thanks a bunch for the offer.  You've moved me closer to trying this, some day.