Maybe I am missing something, but when I am passing the output of DVD player using a digital coaxial to AVR, the AVR's DAC will come into play. A CDP or DVD should not make much difference IMO.
It does make tremendous difference in more ways than you can think of. I have explained all this before, but let me recap.
(1) Have you heard of EAC? It is a PC software that has a reputation of extracting music from a CD of the highest quality. How does he do that? Simple by what is called re-reading. He reads a track from the CD up to 40 times (if needed) and uses complex mathematical routines to identify which is the best extraction.
Similarly a CDP can re-read a track multiple times and decide which is the best read. This is very similar to data transmission across a network. In an network, each packet of data goes with checksum. This checksum is re-calculated at the receiving end. If the calculated and received checksums do not match, the receiver concludes the data is incorrect, and instructs the sender to resend the same packet. This is repeated until the two checksums match exactly.
When you are reading audio data you do not have checksum. But you have other ways to ensuring the read data is closest to the data on the CD. Just one of methods is called sampling.
When a DAC is executed on an AVR through any digital cable, this re-reading cannot be done. If there are errors in the data received, that is what you will hear.
(2) The other issue is the laser reader. A DVD can have upto 9GB of data while a CD has a max of 800MB. Thus the laser mechanism of a DVD Player moves in much shorter bursts to read the larger amount of data, say over the same 1mm of media. When this is being done, it is quite possible that some data points are skipped. This will again lead to errors.
A CDP is meant to read and play just two channels. Everything in the player is optimised for that task.
Cheers