Steve,
HNY to you.
With all due respect (and there's a LOT), it's hard to say what THE most important piece is. You could back up even farther than your "source" suggestion and talk about the recordings.
An excellent recording on 44/16 followed by high-end but mediocre downstream components will still sound better than a crap recording (mastering) on whatever rez you wish, followed by anything you wish.
To me, it ALL matters and it all matters about equally because if ANY piece is broken, it all comes tumbling down.
It's not much different than the analog chain: master>>LP>>cartridge>>tonearm>>TT>>cabling>>phono preamp>>preamp>>etc., etc.
Which one of those do you want to be really crappy? None.
Same for digital. And in my experience, this is what a large percentage of the audiophile population does not get and it results in Vinyl biggots that think digital is crap, no matter what.
Basically, they have just never heard it done right.
Regarding your list 1-4, I disagree with 3 and 4.
#3) An preamp is a preamp whether it's in the DAC or external. If you plan to control the volume, you are going to need one. The Octave does not even have a buffer and takes the output directly from the DAC chips. I choose to let a SP17 do the rest, partly because I love the ARC sound and partly because it's also a phono preamp and offers various input switching, remote volume, etc.
#4) Not interested in transformers, or capacitors anywhere they can be eliminated, especially directly in the signal path. (and yes I know the SP17 is full of caps, but that's the default world of tube amp design). Balanced cables were designed for common mode noise rejection in long runs of cables, primarily in the recording studio and performance arenas. They don't do much for a 7 inch run.
RM