I would upgrade the source first. IMO the Hifiman 601 is the bottleneck of your current setup, it is limited to playing 16/44kHz files and roll off heavily in treble. Your Fidelio X1 and Arrow 4g are not being driven at their full potential. With the Hugo, you can start enjoying a much larger variety of media (e.g. native DVD audio when using it to watch movies), and allows you to better judge the next headphones upgrade.
Sorry to say it..but i had the hm602, and it was in no way a bottleneck..i had one for 4 years and used it last two years as source WITH A GOOD (TOXIC) CABLE into the rca's of my dual mono modded darkvoice 337 into my modded he500 again by a toxic cable.... And it blew away rigs which were much more expensive...
BUT I always plugged the cable towards my amp into the (UNAMPED) LINE-OUT, Not the (AMPED) headphone out! And always played it on batteries...only used wall socket to charge it.. It was dead silent!!
and 16/44 is enough quality..as long u use lossless material.... Hell..even on the high end rig i have now i use 16/44 khz files (capable of 24/192) ..and they sound wonderful on it... I also have 24bit and they indeed introduce a better experience....but those files only are good on really good systems..on ur regular mid-fi tier rig u wont hear much of a difference,,,imho ofcourse..
And this is coming from someone who believes that investing in ur rig contributes to better the audio experience (as many of u know) ..so normally i would agree with u.....but this little player i loved a lot! Only one minus..battery went empty rather fast and it took a REALLY long time to charge it again...and charger got redhot!
But ur right on one thing..it had a bit of a rolled off treble...but i liked that..my ears are very sensitive to agressive treble...so it did fine with my more neutral sounding 337..ofcourse u can get better stuff..i did as u all know....but for money (and on batteries=very silent!!) it was good..dont let anyone tell u differently..