I know the "source-first" debate has been going on for a long time; and I am a relative newcomer. But allow me to interject, or at least clarify a few things that may help focus the argument a little better...
First, there is a difference between a philosophically important link and a practically important link. I.e. Philosophically speaking - the source is of primary importance because it is the start of the chain. It has the possibility to weaken signal before anything else. However, philosophically speaking, it is not more important. This is because any link has the possibility to weaken the signal to the point of either eliminating the signal entirely or replacing the signal entirely (with noise or some other signal). Therefore, merely stating that the source is the most important link merely because it is the first is overly simplistic.
However, I am not trying to argue that the source is not important! Hear me out! I am merely trying to prevent "philosophical" arguments in a "practical" argument.
So then. what makes a link more or less "important" in a chain? I'll explain, on a scale from 0-100 (Zero being "cannot pass a signal/completly replaces the signal" and 100 being "transmits a signal perfectly in every way") imagine that every piece of audio equipment could be assigned a place (I know this is overly simplistic, since there are subjective qualities to take in account, but just bear with for a moment). A more important component, i.e. one you should spend more money on, would have a greater variance in range between the highest and lowest points on the scale. For instance, a $10 cable may score a 75 while a $1000 cable may score an 85. However, a $10 pair of headphones may only score a 50 while a $1000 pair of headphones may score a 90. Therefore, practically speaking, the headphones are more important than the cables, merely because it is "easier" to get good sound from a pair of cables.
However, things are more complicated than that because of subjective matters. Therefore it is necessary to also add "subjective weight and quality" to the equation. That is, "how much does this item affect the sound?" and "how pleasant/unpleasant is the effect?". This is much harder to quantify. For instance, IME cables have very little subjective weight. While there is a certainly some variance among the accuracy of transmission, there is little change in the sonic character apart from the changes due to accuracy. With headphones, on the other hand, two headphones may be very close in accuracy to each other, but they both sound VERY different. This is because headphones have a very high subjective weight, IMO.
This may seem like common sense; but I have seen alot of philosophical argument in this practical argument (and I don't intend the term "argument" to connotate hostility!).
I hope this will help clarify the discussion.