Yes, that's correct. That's because you'll essentially be combining the flaws of both amps together, while only getting the amplification benefit of the second amp.
Best budget DAP - Page 2
Head-Fi's Best Sellers
But DX50 is a player, right? How will it work with the S3. Did you mean D-Zero, if so, will you recommend it over E07K? Also does it have the same problem like what Tus-Chan stated; i.e:- combining the flaws of both amp?
Nah. LOD stands for line-out dock. You know one of those ipod docks and sony walkmans docks? Those docks have capability of turning into a line-out. Line-out sends signal from DAC that is not amplified, causing less distortion and clearer sound. USB OTG is a type of digital out, which bypass both the DAC and the amp. To use USB OTG, you would need an DAC and an amp.
LOD just means line-out-dock. It means the exact same thing. "Line-out" just means it makes your device put out a line-level signal, a signal at a standard unamplified level, so you can amplify it with something else than the terrible amplifier in the device.