One of the virtues of iTransport is that it's one of only two devices available that extracts bit-perfect digital out of iPod (the other is a vastly more expensive option from MSB Tech, which requires intensive modding of the iPod, as well.) If you're interested in the best digital sound, bit-perfect extraction of digital info is crucial, as is reduction of jitter, which iTransport does both.
The thing about using USB out into DAC is that without appropriate care, you'll have jitter issues. You need to either invest in a DAC which reclocks at the DAC level & not the PC level (i.e. Bryston BDA-1, etc.) OR a DAC which controls the flow of digital info rather than rely on the PC to do it, via asynchronous method (i.e. Wavelength Cosecant.)
I've heard some truly TERRIBLE music from laptop/DAC set-up involving USB, including the Grace m902. The only relatively affordable option which strangely doesn't affect the sound too much was USB input of the Paradisea+, which makes it a true bargain, IMO... but the Paradisea+ was the exception rather than the rule. When you opt for the USB connection, you have to know how your DAC will handle it. That's why people who are truly interested in getting hi-fi music out of PCs still use Lynx or RME soundcards to interface with DAC.
Anyway, in light of all this, going with Wadia iTransport via coax into DAC is a much simpler & more elegant way to get top-rate sound, IMO. Less headache.