If I already had a transport or hunking CD player, I would do the D/IO unless I really was eager about SACD. If I needed an entirely new player I think the Sony is a great choice.
As for mods...well modding the D/IO is a bit cheaper, many mods can be done that won't void its three year warranty. And its just a very affordable product especially at fullcompass's price.
But I would definitely expect more in redbook performance from a modded SACD player, however I would be slightly apprehensive about wait times and void of warranty for a pricy product.
Obviously the D/IO is something I would feel safer tweaking than an SACD player.
If I wanted pure an absolute performance with the higher price tag, I'd do the SACD with future mods. But if I wanted an easy upgrade path that will still perform well and be more "convenient" or easier, than I'd choose the DIO.
I think the D/IO is portrayed to have a bit TOO much potential by some people. I would consider the D/IO a budget performer that sounds awesome for the price, instead of a unit that is infinitely tweakable to kill everything else regardless of price.
My personal opinion, is that the D/IO is a cheap product with great performance to take advantage of with really simple/cheap mods right from the start. I don't believe in the hype of it NEEDING a zillion pricy mods for which it will become a world beater DAC.
I mean it is a bit silly...of course I think the D/IO sounds awesome and can possibly sound much better with tweaks of course...but how much tweakability and improvement can you really claim out of a DAC that has the dimension of around 3 stacked CD cases?
I got it, and have minimal tweakage on the unit, and am very happy about its performance. I'm not exactly however having the mindset that with every single tweak, I will have a world beater DAC.
Also we are looking at different price points IMO. If you were to ask me which I would choose, an SACD player, or a DIO with expensive cables that combined with the DIO would match the price of the SACD player, than I'd choose the SACD player.