Well, iriver is not cheating per se. They just use the same marketing term by Cirrus Logic. It is true that pure DSD decoding just can't work with digital volume control. It is because digital volume control will lower the bitrate of the signal, and DSD only has one single bit to begin with. Whenever you see a DAC that claims to support native DSD decoding and digital volume control, there must be some kind of internal PCM conversion. By the CS4398's datasheet, they put in a 'DSD processor' for volume control, yet they also allow it to be switched off for a 'pure DSD conversion', which does not offer any volume control. The words they used are pretty veil, so I assume the so called DSD processor is just a DSD-to-PCM conversion stage, but they don't want to spill the beans as it isn't exactly good marketing material.
I think it is also possible to implement some kind of analog volume control stage at the output of the DAC. So it is more like a digitally controlled analog volume control..