Sashav, a digital box like the DEQX can do a number of things that can not be done in the analogue domain. Well, some of these things CAN be done, but not without a lot of experimentation and a lot of extra circuitry in the box. If you compare a product like the DEQX with a Marchand XM144 crossover, these are the advantages of the DEQX:
- steep crossover slopes, up to 100dB/oct. Marchand can only do 24dB/oct and introduces phase issues. The Marchand's x-over point and slope can be adjusted by purchasing a card ($10) compared to a few clicks of a mouse button with the DEQX.
- group delay. Both products implement this, DEQX via your laptop and Marchand via a drop in card.
- room correction. DEQX can correct a near infinite number of frequencies. Marchand attenuates or boosts selected frequencies via insertion of notch filters.
On the face of it the DEQX is more flexible and easier to tune. However (as I have said many times) the problem with the DEQX is that it drags the overall quality of your system down. I have heard a DEQX with a high quality analogue source. It makes the turntable sound like a cheap CD player.
The biggest problem is (as you say) it robs the sound of dynamics and subtlety. The frequencies that suffer the most are the midrange and treble. If you could think of a way to use the DEQX only in the most problematic frequencies - 200Hz and below - you would have the best of both worlds.
I recently experienced an audio epiphany with the DEQX. I now recognize that room correction alone provides some benefit, but is nothing compared to correction of phase and group delay.
The other gotcha - DEQX is very system dependent. On my system it brought obvious benefits along with obvious losses. I would have to give up some things (transparency, dynamics, resolution) to gain others (coherency, accuracy). How much YOU benefit would depend on the balance of faults and strengths of your system. So I would shy away from making an endorsement of this product, or any other product.