You will be losing HDCD decoding, so long as you use the dac as your audio source.
My suggestion is to keep two sets of lines out for cd play - one for HDCD (from your player) and one from your dac. A buddy of mine has done this with good results.
This assumes, of course, that your dac and analog out on your cd player continue to function when the digital out is in use. I don't know why it wouldn't, but one never knows.
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