I would venture to guess that the Outlaw DAC is as good as most DACs in the budget and mid brand CD/DVD players. As you go higher up the scale, however, the players incorporate better DACs. I've heard some higher-end CD players that would blow the Outlaws DAC away. These players cost $1000+. If I had that kind of money to begin with, I'd have probably never looked at Outlaw for a receiver.

That being said, I use an old Sony portable, but I mean the very first "portable" Sony produced with a separate power module and a battery pack that attached in its own case, with a Creek amp connected by Outlaw cables. This system sounds better than my Outlaw with a panny DVD player via optical. I've swapped the speakers around between the systems and the better sound comes from the Creek/Sony. Now it could be the Creek amp is better (probably is, it cost more for a modest 2 channel amp.) I haven't tried the sony connected to the direct in on the Outlaw.

And one other thing. If you do go the separate CD player route, get the Outlaw cables to connect it. The clarity you get with these cables is incredible. They are a true bargain. Stay away from the Monster stuff.