Sorry for crashing the thread, but I saw my review and comments had gotten tagged.
To clarify my experience, I found that sound quality and transparency radically increased as I went from the Chord Mojo to Hugo2 to DAVE, then got completely next level with Blu2 got added to the mix (details in my review links below). When I say "degrade", I mean that the headphone or IEM is the bottle neck, and the overall system performance is less than it could be, not that sound is getting worse. It is just that weakest link in the reproduction chain becomes the transducer, and they are holding you back from hearing what the rest of the stack is capable of doing. This is what I meant by "topping out".
Especially, when Blu2 got added to the mix (whether to Hugo2 or DAVE), I found that various headphones, CIEMs (I have Noble Katanas), and 2 channel setups I have all seemed to hit limits for how much better they were getting. Everything got better. Some pieces of kit got better a little less, some got insanely better and I was hearing things I never even thought were there to hear.
For the headphones and CIEM that I have, and for my traditional 2 channel setup (B&W 802d3's + Benchmark amp), the Blu2 highlighted limits of what they could reproduce. It was only with the single driver high efficiency speakers (Omega Super Alnico Monitors) driven directly from the Hugo2/DAVE that everything the Blu2 could do really revealed itself. Since then, I've gotten some Voxativ 9.87's with AC-4D drivers, and that magic is next level beyond even the Omega SAMs. For example, I'm hearing insane dynamics and speed with the Voxativ's that weren't there with the Omegas, and for the first time, I'm getting the same "startle" reflex when hearing a drum kit that I get when listening to a drum kit live. Wild experience.
For various headphones and my custom Katana's, everything they do well got better as I went up the Chord range and added the Blu2. You need to audition your setup to see if the "better" you get is worth the significant $$ investment to get to that next level. For example, a friend auditioned my DAVE with his Focal Utopias and compared with Blu2 in the mix, and ordered a Blu2. The lift was real, and the extra $10k was worth it for him, but I would be hesitant to drop the extra $10k to get that lift (we all struggle with where to draw that line, don't we?).
However, with the Utopias and BluDAVE I was not able to hear the crazy holographic soundstage I'm able to hear with the Omegas (and now the Voxativs) once you throw Blu into the DAVE mix. That insane holographic soundstage was enough motivation for me to part with my beloved B&W 2 channel setup and make the major investment in the Voxativs. Once that sorts itself out, I'll start the search for headphones and IEMs that can mimic that experience while at the office or on the go.
I must say that I'm very intrigued by the idea of a single driver IEM. Moving to a single driver 2 channel setup was absolutely transformational for transparency. I look forward to learning more from this community and auditioning the Warbler's at some point!