Got my D1 on Tuesday of this past week...and got my RMA # this morning.
First impressions...aside from its good looks - sounded no better out of the box than my Fiio D3 via toslink. I ran redbook and 24/96 flac tracks for comparison and could not isolate any real differences in sound between the two. Later that afternoon, I recieved a new (true) glass Toslink cable (Sonicwave) and tried again. Much better performance, however I found the Fiio to have better bass and detail.
In USB mode, I could only compare it to my Valab NOS DAC (redbook only) and the D1 got smoked. The D1 sounded rather shrill on the highs, flat and lifeless in the mids and seemed to be lacking for much punch or resonance on the low end. As a result of whatever drivers are automatically installed for the D1 by plugging it in the USB port (Win XP SP3), I was only offered the Direct Sound playback option in Foobar. The Valab was running a generic Ploytec ASIO driver. Not really an apples to apples comparison, but just a quick survey against some gear that I already know to sound good within the price point.
I didn't really do too much more as I didn't realistically expect nirvana out of the box. I setup the D1 plugged into a laptop with a Sheffield Lab burn-in track playing on a continuous loop for about 60 hours or so...
The Fiio D3 rocks for less than $30. Boxing up my D1 for return as there was no appreciable difference after burn-in. YMMV as I bought this DAC for a non-headphone application (tested only in this manner) with the added bonus of portability and headphone usage. Think I will continue looking. I apologize for posting my results in a Head-Fi forum, but seems to be the only place the D1 is being discussed.