Nada saved me the trouble explaining the Esoteric line up numbering. Yes the D01 is the top of the line in DACs and uses PCM1704. Also, their top of the line CD player (the $16,000 Esoteric X-01 D2) uses PCM1704 for the CDs and AD1955 for DSD signal.
As for the emu 0404 usb, you are right it uses the AK4396. Both the AK4396 used in the emu and the AK4397 used in the Esoteric have 120db SNR (in a best case scenario) which means around 20bit of resolution. This means that for every 6db of digital volume reduction, you loose 1bit (regardless if the digital volume control is done at 24, 32 or 64 bits).
Of course that if you use the PCM1704 and follow it by a crappy output stage and preamp, you will loose all the benefit. However, what is certain is that it is very very difficult to make a sigma delta dac chip sound as natural and realistic as the multibit dac chips such as the PCM1704.
Here are for example some high frequency sine waves of sigma delta chips. You will see that the sigma delta chips look as bad as they sound
Also, the more transparent your gear, the more you will hear the true nature of the dac chip. The "top end" preamps have either short circuit paths or very high quality components. If a preamp uses "
tens and tens or capacitators, resistors, and inductances" that are not transparent enough, it doesn't qualify as being a "high end" preamp in my book, regardless of the price.
As for saying that an integrated sigma delta dac/preamp can beat a good PCM1704 followed by a preamp, I have to disagree. If the sub-par sigma delta dac messes with the timber and tone of instruments at the source, there is hardly anything to do to improve the sound. You can either heavily filtrate/or use tubes to make it sound "musical", or you can leave it relatively "unfiltered" and you end up with a cold sounding DAC. Personally, I have yet to listen to a DAC or CD player based on a sigma delta chip (at a moderate price) that are both musical and detailed. The $14,000 Esoteric D03 might do that but I have never listened to it.
I think that Kingwa did a good thing by basing most of his DACs on the PCM1704uk chips. While they cost more than the sigma delta chips, it is easier to make good sounding DACs from them than it is from the more common chips. I just wish that he comes up at some point with a PCM1704uk upgrade module for the entry level FUN so that more people can compare the "old" mutlibit chips vs. the newer sigma delta ones.