External DAC vs. your quality processor


As I work on completing the path of music from iMac to Maggies there comes the issue of: Should I consider an external DAC or rely on the DAC in my Krell HTS7.1 to do the work. Perhaps others have dealt with this issue and discovered that, indeed, their processor handles the DAC work very well without the need for an expensive external DAC. Afterall, when you have spent big bucks on a quality processor it would be a shame to find out that you need to shell out more big bucks for a DAC because the processor under-performs. I'm also struggling with Toslink vs. USB.

If you have had similar decisions to make, your comments are welcome.
puerto
I found Benchmark DAC1 to be slightly cleaner than my HT processor alone using Toslink. The difference was small though. A friend of mine actually preferred the HT processor sound (it was less "articulate" or "recording" sounding or more musical to his ears). My suggestion would be to check yourself - get a DAC with a 30 day return policy and test and test and test - the nice thing about an HT preamp is you can usually level match to 0.5 db with a test signal for A/B testing and then switch from the listening chair using the remote to compare.
Nothing as fancy as a Krell - see my Virtual System - the HT processor is listed there. FWIW: I can't hear the AtoD and DtoA loop in this processor and I have tried very hard to do so (So the AKM DAC's it has are probably ok for my tin ears). However, I can hear what is presumably the effect of interface jitter via Toslink input into the processor from a cheap CDP (although my friend preferred what I have presumed is a slightly more "jittery" sound - so it is obviously no slam dunk - coudl it just be a different sounding DAC?) I must be careful though - as you realize what I am saying is partly conjecture. That is why I say test and test and test yourself - make your own choice!