I agree with you there, except for the following caveats:
-- By using a CD player instead of digital inputs you are sacrificing the extreme convenience of a digital media library.
-- Using a high-quality digital RCA cable between your transport and DAC will yield virtually the same sound quality.
A unit such as a modified transporter or the SB+ that I own are both examples of integrated high quality units capable of streaming music, so they do exist.
With regards to the cable. Yes, cables can improve things, but IMO you still haven't gotten over the fact that you have to stuff the digital signal through the SPDIF interface. Putting the DAC very close to the transport (ie. within the same box) does seem to help.
Note that I'm not trying to state this from a technical viewpoint, i.e. an genuine understanding of how the SPDIF interface works. My comment is based upon the fact that despite spending a lot of time trying to get the best out of some dedicated transports and DACs, that some standalone CDPs sounded better and thus were better value for money.
Another example would be at the extreme high end of something like an Esoteric. I remember someone on this forum playing with their transport/DAC combo, and prefering the integrated X01.