Really? compressed, separated??... my definition of compressed is FLATTENED, 2D sounding (aka MP3). use FLAC and a pair of good headphones and it will sound airy, spacious 3D soundstage, i will not say theater-like experience but near.
My only complain is customer service in mexico, the device SQ is darn good, and the FIIO-DIRECT CUSTOMER SUPPORT ROCKS, WAITING FOR MY REPLACEMNT UNIT TO ARRIVE, waiting to test it with MDR-1R.
To refute your theory. Used mine with XBA-H3 (Bassy) but still had a lush 3D soundstage WOWed me, i had Ultrasone HFI-780 (gave them to my german boyfirend), sounded good in low but Grreat in Hi-gain, with the ultrasones it sounded fuller, more body, 3D was less bit a bit but never compressed.
Compressed sounding DAP: iPoop, iCrap and so on..
That's great, I'm glad to hear that everything seems to work out fine for you after all