I'm struggling to figure out how important sources are in my own experience.
It strikes me as if it's make-or-break.
Yes, you'd think that the transducers would be all-important, but . . . really, the subtle changes wrought by front-ends seem to be the things that make a system liveable and even compelling on a day-to-day basis.
Great sources are subtle and yet the most important part of a system. Any fool can tell that speakers or headphones are important. It take an advanced fool to focus, properly, I think, on sources.
And you can rate them on $$ spent, up to a point. A $600 cd player is competent and, eh, I'd just as soon be watching birds. A $2000 cd player is great. I look forward to getting into the listening room to use a $3500 cd player.
I assume this stops at a certain level of $$ or quality. But you get the point.
Yes, the $600 should be good enough. But, really, it's sad to say, it pretty much sucks. You'd be better off driving around listening to your GM Bose giving off the stock reports or livestock futures.
What you call "overengineering" apparently isn't. It produces the stability and dynamics which, over time and in subtle ways, makes the high-end experience so much finer than a merely competent or adequate one. 1's and 0's aren't all there is, taken nakedly, and to keep thinking that they are is perverse.
"Coloration" is life, and not just in audio. Unless you want to live in a sterile cocoon sustained by an IV drip, you need the parts that surround the DAC. A Benchmark DAC is drained of life. I've heard one. It's an engineer's wet dream. It is not music or life. Only an idiot would aspire to music drained of life.
At some point, you have to give in and try systems like your friend's, in your own home, at your own leisure, over time, if you can afford it. I think you'd then stop your (defensive?) rambling about pro equipment and such, and get some real pleasure??
I say this, because I did pretty much what you did when I first got here, only to realize that . . . the boomanas and such are . . . much wiser, and better listeners than I was / am.
And, although this is more subjective, I'd stop thinking about speakers. Headphones do all that speakers do, at a MUCH lower cost, save for the visceral bass thing. If money is an issue, and it always is, speakers are dinosaurs. IMO, though. And the $$$ will REALLY get you juice in terms of headphone sound.
The juicy witchdoctors here are right. This is the realm of magic. Sorry you aren't a shaman. But music is not engineering. At least not at its best, in the gut. That's where the artists live. The placebo effect, the physical appearance of gear, its cost, "overengineering", cables, and tweaks all produce better sound, because as human beings we're complete, mysterious, multi-dimensional packages.
Stop fighting it, and the benefits in your life extend well beyond audio and music . . .