You said "I really liked the ability to turn off the front panel display completely", but it's not true on my Hegel HD12. There is such a button - DISP - on the remote control, but it doesn't work on this device (similar to MUTE for the matter).
I had bought a hifiberry which is a i2s DAC mounted directly to rPi. There are other i2s DACs. There is one with Sabre and external clock. RPi hasn't the best USB output. Using i2s directly one limits cable issues. I've installed mpd on rasbmc. To avoid potential latency I use XBMC with HDMI and mpd via i2s.