I pretty much did this same thing as TCG -- traded in a Capitole SE for a pair of AZ adagio speakers and bought a sub $1k Onix CDP and am not looking back. Does it sound different, slightly more harsh in the highs? Yes, and the mids aren't as smoothe either, but now that I have about 500 hours of constant play time on it it is really coming into its own. In fact, there is more detail and resolution at both ends of the spectrum and the dynamics seem to be equal or possibly even slightly better on the lower price CDP. Don't get me wrong, the Capitole was a beauty in many ways and "analog-like" -- not "analog", but analog-like. Which is perhaps the whole point TCG is trying to make.
I'm right there with LoneWolf, I do like the detail and the dynamics, at least for certain genres of music as that is what helps recreate some of the sense of live performance -- to my perception and taste, but that's not all there is to it when it comes to listening enjoyment.
I'm still working on my vinyl rig, and I have no intent of not having that option as well, and there are two nice R2R decks waiting in the wings to see if I want to go that route too.
Interesting that DGO should mention "Rumors" as that has been one of the reference disks that I have toted around with me since it came out and I've heard it in many, many systems -- tube, SS, analog, digital, etc. over the years, and that I played many times in the brief interval between when I got the new speakers and the old CDP went away. I played it again a couple of days ago -- probably at least 5 times on the new, much cheaper, CDP -- and I was just blown away -- it was the clearest, most dynamic, cleanest reproduction of that album I've ever heard. Period. Yes, there was some slight digital edge, but it didn't detract from my enjoyment at all. It was the first time I heard how really nice Christine's voice can be -- just never heard it like that before. Also, the bass line was cleaner and tighter than any other system I've heard it on, and the drum kit sounded more real as well. Of course when the TT is setup that will be one of the first things to get played, and I'm certain it will sound glorious too but I'll save the speculation on specifics until I actually hear it.
Digital? Yes, I do like it. Is it vinyl, no, and sometimes that's good, and sometimes it's not, but it's here to stay and only improve. So, perhaps I find myself mostly in agreement with TCG here, at least in terms of bigger bucks spent on better mechanical digital sources, though perhaps not to the degree he's happy with. I do hear differences, sometimes pronounced ones, and that goes for the ultra cheap to the middle of the road just as it does for the differences between the highest end and the middle tier players... but soon I hope to hear what the SB and HD-based playback can do, and then the whole equation is likely to change again

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Interesting topic, and lots of well thought out and intelligent responses to ponder.
The bottom line for me personally is that I don't see myself wanting or needing a mechanical player that is any more than the Onix CD-5 (though I may have it slightly modded to squeeze that last bit of midrange smootheness and take the edge off) and pretty much anything from here out is going to be HD-based and ethernet connected, or... when I'm in the mood, vinyl.
Thanks all for a really great and thoughtful thread -- with a pretty leading title this could have easily erupted into a real flame fest but it has stayed very civil and intelligent discourse.
I love AC!
-- Jim