Wow - talk about being overly general. But I guess I'll start.
Although I cannot answer in specifics - I will say that if you take an equally priced receiver against an equally priced pre/pro, the pre/pro will most definitely have the better processing (DACs).
As far as DSP are concerned, most receivers will try to cram in as many modes and new features as possible to sell their product. It is relatively cheap to stick on another DSP vs implementing a few more high quality DACs / other high grade components. But then again, all these additional DSPs / modes are meaningless if the sound quality is inferior to that of the pre/pro - assuming you have funds to go separate.
Actually there's a good chance your transport will have a better DAC then even the pre pro. I prefer the DAC's in my Denon 1600 to those in my expensive Rotel 1098 pre pro and its the reason I just added a Musical Fidelity A3.24 external DAC.
Ahh - good point. I definitely agree. How much did that external DAC cost you, Andrew? I take it that you hook it up by connecting a digital in and sending it out as analog outs?
Yes that's correct. The A3.24 is a Sterophile Class A rated product but you can usually find them on audiogon for about $700US used. There's a whole host of DAC's out there though if you want to spend less...or more! The nice thing about going the DAC route is that you can connect more then one transport to it so I currently have my 300 disc changer connected to its optical input and I'll add a nicer transport this summer to the coax input. That way for critical listening I can utilize the better transport but for regular music or when I'm feeling lazy I also can fire up the jukebox and listen to a very very good sounnding jukebox (which typically don't sound that great) another nice benefit is that i can upgrade the transport to keep current with other surround formats (SACD, DVD-A etc) and still keep the DAC for great redbook performace...sort of the same benefits seperate amps and pre amps have.
There's a lot of really good CD players to be bought too though that could sound better then some DAC/transport combo's so its really a matter of choice and finding something that will fit your system.
This one's a little more money but you might be able to get him to lower the price a bit. I once owned the MSB Link version 1 and it was quite good and VERY well built.
I was thinking of adding the Musical Fidelity 3.2 DAC to my system. I have the Denon 2900 and Sony SCD-C222es as transports. These should work quite well since both are solidly built. My question is, how does the DAC compare to a stand alone player like the Marantz SA-14, Arcam FMJ23/33, or amy other player in the $1-2K region. For me to invest in the 3.2 DAC, it will have to be significantly better than my two transports when it comes to redbook playback.