I didn't manage to read through this whole thread so maybe someone has suggested the following things already, but:
1) I think you should make the total bithead support both USB and SP/DIF input. Right now that requires your much more cumbersome and expensive micro dac setup. There are some other converters more resembling the total bithead that do both, so yours should too.
2) My total bithead seems to pick up some 60 cycle hum when I use it plugged into my laptop computer (Thinkpad T61) when the computer is on ac power. It doesn't happen with my officemate's Macbook Pro. So, there's not enough filtering inside the Total Bithead, it sounds like. I hope you can fix this. This is with the Total Bithead running on USB power, I haven't yet tried it on AAA cells.
4. It's annoying that you recommend against rechargeable AAA's in the Total Bithead, indicating that the internal voltage is marginal. Who wants to keep throwing away batteries? Please fix this, by modifying the circuit to use lower voltage, or adding a dc-dc stepup converter inside, or running on more batteries (six rechargeable aaa's would be fine, or if necessary a 7.4 volt standard camcorder pack like Sound Devices uses).
5) Finally and somewhat more ambitiously, there is a crying need for someone to make a no-nonsense audiophile DAP. The big merchandisers are all making "multimedia" players, even Neuros has lost interest in audio, so I think you're elected. When you think about it, a DAP (with the video junk thankfully removed) is nothing but a DAC/headphone amp whose input source is internal storage instead of a computer port. Yeah that means adding a microprocessor and some controls and some software, but the software is already done (Rockbox) and the other stuff is off the shelf. Your DAP would basically be a Total Bithead with an SDHC slot (better yet, 2 slots, one of them internal), a simple monochrome LCD display, and a microprocessor running Rockbox and feeding the DAC. Of course it should still be useable as a computer peripheral, and it should support SPDIF output. It could even have an accessory hard drive "backpack" containing a 2.5" SATA laptop drive (500gb available today), that would use the flash memory as a cache so the HD would almost never spin. If you build this, I think you will be the king of head-fi.