Preferred Audio Output, USB or 3.5mm?

I know most DACs that use HDMI for I2s only but they should use regular HDMI. HDMI will transmit SACD, DSD, DVDA, FLAC and every other HI REZ format I know of. USB is good but limited to what HI REZ formats it can transmit and so is SPDIF. Plus if you want to be able to use Bluray audio with your fancy DAC, SPIDF will not pass the uncompressed audio. This is the same for computers with Bluray drives.

I use the USB port of my mac to hook up my Amp/dac. Havent used HDMI yet.

Since the original topic is about 2 channel, I don't believe regular HDMI to be the better connection. It's just not necessary and it isn't a superior connection compared to other, less expensive to implement options. SPDIF, usb and firewire is fully capable of transmitting hi-res 2 channel formats. You can use a $40 hdmi audio de-embedder for SACD's and the uncompressed audio tracks on blu-rays and run the spdif output to your favorite dac if you must. You can rip the DVD-A's stereo tracks to your computer and play them through your dac as a file or burn them to a disc and play them through a regular dvd player.

What about Hi Rez Bluray audio?

If bluray audio catches on, then that would be great, but i wouldn't put any money on it at this time. Time will tell. I think hi res audio downloads fill this niche quite well. No need for encrytpted hdmi and multi channel avr's for those that are only interested in 2 channel music in high resolution formats.

There are also some great Bluray concert discs and methods for listening to them in uncompressed audio without hdmi. Check out the $40 hdmi audio deembedder from monoprice. Or, buy a bluray player with good analog outputs. I agree that HDMI has a place in HT though if you need video and multi channel sound.