I've been interested for a while if anyone has turned off dolby headphone when using a good pair of headphones like the AD700's/k701/dtxx0's. All I seem to see is people saying, "Well when I turned off dolby headphone, my cheap piece of crap no soundstage headphones didn't give me good positional cues." I for one find that CMSS 3d completely ruins the sound on my ad700's when I turn it on. Haven't tried them with dolby headphone, but I have absolutely no problems telling distance and direction with them in pure stereo mode.
My plan is to try out a higher end DAC next like the DAC Magic or Music Streamer II+ (likely this one) because they are reported to really expand soundstage and seperation in comparison to lower end DAC's. I'm really starting to notice some unsatisfactory noise and artifacts coming out of my xfi prelude so I will most likely sell it off to fund better equipment.