There are different schools of thought on this. I tend to be a "source first" person, so I try to focus on good source components first, even if it means putting up with just "ok" amps and speakers until I can afford to upgrade them.I do understand that the signal will now be going through the standalone but, does the dac have that much control and ability that it literally steers the majority of the sound signature that we hear? If true, can you explain how this works? Thank you.
I think of it kind of like the Princess & the Pea. Yes an "ok" set of downstream components will make it harder to get a sense of improvements in the sources (like lots of mattresses made it harder [but not impossible] to detect the pea underneath), but the source in my mind tends to be the biggest limiting factor of a system.
It's like when I first heard my buddy's vinyl rig after listening to mostly mp3s for months in the early 2000's. He didn't have an amazing rig overall, but I instantly realized the vinyl source was doing something my digital sources couldn't.