I have not tried using the Touch with USB out. I do not have a DAC on hand that will work higher than 24/96 with USB. I can use files up to 24/192 with the SP/DIF output of the Touch and input on the DAC.
The mods improve the power supply to the clocks and the digital output section of the Touch. I have not traced out where the USB output might come from.
I have heard quite a bit of difference in USB cables. To get a very good USB cable could cost around $500.00. SP/DIF cables also sound different, but you can get very good sound for under $150.00.
In all cases, I do suggest replacing the stock switching power supply with a good linear power supply.