Thanks for your thorough explanation!
The S-Master is an amplification chip, right? So even if I were to use analog line out, like T.R.A.N.C.E suggested, the ZX1 will only convert the signal to analog and then leave amping to the external DAC/amplifier, leaving S-Master HX out of the equation? Or is S-Master also involved in digital-to-analog conversion?
However, after reading up on the PHA-3, it seems the balanced headphone connection (ideal for MDR-Z7) only works with an all digital input, so that will be the option I'll use. With whatever source/library/transport I'll find useful then. :)
Using the analog out uses the S-Master chip, using digital out does not. The S-Master chip is just a PWM (or digital signal) to analog converter, so using the Line out actually is leaving the S-Master to do exactly its usual job, but outputting an unamplified signal. I personally think the only reason that a DAC is even included in the PHA series is so that they can be used with smart phones and computers that don't have good DAC's. As using the Line out from the ZX-1 or other S-Master DAP provides an excellent signal to be used by an external amp.