If you are using an iPod Classic, you may want to consider the JDS Labs C5 amp + LOD (such as Fiio L9). This will bypass the amp on the iPod. I don't believe that there is any point to a having a DAC with a Classic as it is not capable of digital output through the LOD. You may want to get someone else to confirm this, but I am pretty sure it is correct. I am using iPod Classic 7G 160 Gb > Fiio L9 LOD > C5 > Shure SE535...very sweet indeed, and not a bank breaker. Also a good size match with the iPod.
To clarify, for non-apple devices to extract digital signal from ipods, they need to be authorised by apple (labelled "MFi"), so only a few authorised non-apple products are capable of doing that. These include the PHA-1, Vamp Verza, and M8.
There are also MFi docks that will take digital signal out of the ipod while docking it for home hi-fi setup - such as this one by Onkyo: http://www.intl.onkyo.com/products/accessories/ri-dock/nd-s1/index.html