@Michael - In my experience a lot of the alleged differences between different digital products and different bit rates, HD audio, etc. are all pretty illusory and don't survive controlled testing. So all the hand wringing about whether Redbook standard CD is bad and HDAudio tracks are good or compressed files are bad strikes me as kind of obsessing over things that don't really matter. I've done a few tests where I made a disc with a music file in CD format, then followed by it in CD format that was converted to an AAC lossy file, then back to CD and then randomly repeating either one or the other, and I've yet to find anyone who could reliably tell the difference at anything but really low bit rate AAC encoding, way lower than what the iTunes store offers. So I don't spend much time obsessing over it.
I also find most DACs beyond the very cheap bottom end and compromised implementation things like the Airport to be identical. I used to believe differently in my youth, but getting exposed to controlled testing by some audio engineering friends definitely changed my mind about a lot of this. There is a place where price/design matters, but that occurs lower than you'd think.
But there are also bad MP3 encoders, and very low bit rates, and as for iPod docks, I agree. But then, they all are small and bear the limitations that always will put on an audio system, though some sound better than others. And none of them sound as good as a "real" stereo as you noted. I used to work selling audio gear back in the 70's while in college, some high end stuff, and some normal stuff. I loved audio back then, every company had their own look and all seemed to be proud to put out big, impressive pieces, not the commodity items you see today. Row after row of identical black boxes.
One of the reasons I prize B&O, no one else seems to be so design focused.
