Is my wireless setup as good as a decent CD Player

Well, if you like it, then it is good enough. As to whether it is as good as a particular CD player is something you can only answer by doing the straight A/B comparison with the CD player you have in mind.

Actually, I would first check out an A/B using wireless transmission of your music vs a hard wire interconnect from your iMac to the DAC, and see if you can hear any difference that way. If your system is revealing enough, I suspect you will, but of course I may be wrong. In audio, you really can't say much based on theory until you actually try the thing in question. There are just too many factors that affect the exquisitely complex phenomenon of human hearing and perception. So, I am a little less sanguine than Pabelson about assuming "bits are bits" whether wireless or wired. But I hope for your sake it turns out to work just as well, because I love the convenience behind this sort of set up.

Great advice. I alsohave a Motu firewire recording interface that will allow me to use a digital out to go into the other input on the x-dacv3

I had kind of been thinking that although the x-dac supposedly corrects timing issues, perhaps the wireless and the toslink both introduce their own timing issues which the dac might not smooth out.

As you say though ...i guess ears are the only thing that can tell rather then tech specs.

I do need to get a better receiver in this system before I can make any critical decisions.

Don't think of the wireless as inducing jitter--the wireless is 802.11, which should be packet-based protocol. That means that the data is being reclocked for output in the Airport, since PCM over toslink or coax is a stream. The reclocking is where the "jitter" is going to be introduced--if the data rate of the AP is insufficient, the stream is going to be interrupted and your DAC will have to relock, so defects there should be like falling off a cliff--its either coming through or its not. At least that is my guess.

The issue of whether its as good is going to be how well the CD transport you compare it to does at limiting jitter compared to the AP reclocking. Since the transport is also reading real time, the comparison may also run to how good the error correction in the transport is. The analogy on the wireless side is how well you have ripped the CD data and whether what is on your hard drive is a bit-perfect copy of what was on the CD. The jitter issue is going to be also impacted by how well your DAC deals with jitter. Some are better than others. Anyone who advertises a DAC that "eliminates" jitter is pretty much full of it.