It exists; we saw it for ourselves! Wadia's $349 iTransport can take the digital signal out of an iPod before the DAC, outputting 16-bit/44.1khz resolution for uncompressed files—it doesn't upconvert lower-rez files like MP3s, but it does reformat them to 16/44.1, according to Wadia's John Schaffer.
And then we heard the iTransport driving the $13,500 Wadia 781 player/DAC/preamp and Halcro DM308 power amp and a pair of Verity Parsifals. Wow!
Big, bold, and extremely accurate sound on Van the Man and some baroque lute. We poked around he rear panel and noticed the iTransport utilizes an outboard power supply. "To make this price point, we essentially hot-rodded a wall-wart," Schaffer explained. "It does keep the AC out of the signal path, though."
"And is an obvious path for an upgrade," quipped Jon Iverson.
XLO cables were used throughout—including Ultralink XLO's Limited Edition interconnects ($2500/1m) and speaker cables ($9500/8' pair).