Kelly,
Have you listened to the D-EJ1000 through the line out yet?
I've been very impressed with it going out to my Cosmic (analog out).
I'm afraid I don't understand your analysis of the D-EJs sound as "grainy in the treble" and boomy bass. Compared to what? Listening with what?
I find the J1000's sound to be VERY smooth overall listening with Ety ER4S either through the heaphone out or through the line out with Cosmic. I agree with Eagle_Driver though, that the heaphone out sound is a bit rolled off in the highs and not as "clean sounding" as the Panasonic PCDPs. The only boominess I hear is when engaging the bass sound emphasis (which DOES make it sound boomy, especially compared to Panansonic's "Xbass" or whatever they call it). And, of course, you can't listen through the headphone out at a very loud level without clipping the amp.
I realize this player isn't audiophile quality, but I've listened to quite a few players recently from Panasonic, Sony, Iriver, Audiovox, JVC, etc., and I think to get any better than this you're in for a long and probably fruitless search. If you want to play MP3s as well as CDs, the new Iriver IMP-400 has an EXCELLENT heaphone out (the best BY FAR of any currently-available player I've heard), but I don't gather that is your main plan of usage (I'm guessing you want primarily a good line out). But the Iriver units don't have a true line out. Neither do the Panasonic units, according to Eagle_Driver (doesn't bypass the opamp). It would seem the Sony units are the best present choice in this regard, and I've seen a number of posts saying the D-EJ1000s line out to be excellent compared to older Sony units. Plus, you have the Sony DACS, which are typically among the best of mass-produced units. My guess would be that to get anything significantly better you'd have to find a vintage Sony (as you've mentioned above).
Having had both a Sony D-5 and a JVC XL-P80 (I still have the JVC and it works great), I can say that the D-EJ1000's line out isn't as good as the D-5, but is at least as good as the JVCs (which is very excellent), plus it has VERY long battery life and doesn't skip when I'm on the road in the car or walking (which both of the other players did/do).
Regarding the G-protection, I really don't hear any sound degradation with it being set to the "1" position. And having done quite a search myself for one without some sort of anti-skip or the ability to turn it off completely, such an animal no longer exists to purchase new, so far as I can tell. And, quite frankly, as long as there is an "uncompressed" choice/option, I'd rather have that than no protection at all. I don't really want to hear skipping while using the player in the car or while walking. I bought a CHEAP Audiovox player a year ago (no longer available) which has an option to turn the skip completely off, but the player sounds very grainy and the DACs are cheap sounding.
Of course, only you know in exactly what application you'll be using the player, and it must fit YOUR needs. But I have a feeling that you're going to have a VERY tough time finding anything much better. If you do, please let me know. I'm interested