yes, toslink is useless...high grade glass toslink is a tad better, but still cannot compete against a short coax cable IME. jitter's isn't audible per se, but the sound is tighter and more focused in coax.
depending on the USB chip in your Valab DAC, you could just add an ADUM4160 dongle in the USB path...this might be your best bang-for-bucks tweak EVER.
I read some guys on a local forum rolling CS8414/DIR9001(DIP versions), and their results were pretty unorthodox...but the Valab DAC is broken by design as NOS cannot work, so I'm not surprised that they screwed up on the DIR9001 implementation altogether