just want to update this thread to let you guys know that i've finally found the device i've been looking for - Belkin Network USB Hub. it's only been out for a couple months. although there are a few other network usb hubs/servers out there, as far as i know, this is the only one that supports "usb audio". what this means is that for those of you who own a DAC with usb input (Benchmark Dac 1 usb, PS Audio Digital Link III, Mhdt Lab Paradisea+, Scott Nixon, Stello, Apogee, etc...), with the Belkin Network USB Hub, you can now stream music from your computer through ethernet or wirelessly (a separate wireless router required) to the usb input of your DAC.
here's a link to the device:
this means you don't need to deal with the apple airport express's optical output and its jitter problem, or spend a lot money on a squeezebox, transporter, sono, olive and more money modding them to make them sound good. i guess you won't have the nicer user interface of the squeezebox, but you can use itune, and any usb-based remote control.
i was able to do a comparison between the apple airport express and the belkin network usb hub a few days ago. the airport express was connected to my ps audio digital link iii's optical in, and the belkin network usb hub to the usb in. i streamed music to both from a computer in another room through the network using itune and apple lossless files. i listened to Diana Krall's "The Girl in the Other Room" through both devices, and also listened to the same songs from the CD layer of the SACD/CD hybrid played through my Yamaha CD changer/transport connected to the ps audio digital link iii's optical input as my reference. In my setup, both my sister and i thought the CD had the best combination of tonal richness, smoothness, and details. The Belkin Network USB hub sounded very close to the CD in richness and smoothness, but perhaps very slightly less in details, while the airport express had similar details as the CD, but sounded thin and harsh at times. my sister had a more difficult time picking between the CD and the Belkin Network USB hub, but was able to pick out the airport express's harsher sound 90% of the time.
so even if apple airport express's optical out might be bit-perfect, its sound is definitely not perfect. i suspect that it could be due to the jitter, but i didn't have any equipment to measure it.