So I FINALLY took the time to get into my amp rack and plug up the Airport Express running digital into the Helix DSP, utilizing the Helix remote (for safety) to test. The remote works well, but you can also control volume while keeping full digital resolution from your iDevice. So I just pegged the iPhone volume and used the Helix remote. I rigged it so I could switch manually between RCA/Optical on the helix remote, A/B comparing through the 149BT and Airport Express. The AE was simply plugged into A/C via extension cord, for test.
Findings: It rocks! The fidelity is outstanding for anything I played from within the native music app from iOS, which is typically what I use for source conventionally through the Alpine. The sound quality is noticeably better as is output. Switching back, you can hear the digital grain introduced by the multiple conversions and the shortcomings of the head unit's preamp stage.
This I expected though because you're sending full-digital signal to the DSP, bypassing four different stages and conversions into and through the head unit through it's preamp. DA, preamp, helix input, AD. So instead it's wifi stream through the AE, out optical into the Helix. Much much better signal path. Many becomes one DA conversion just at the output of the Helix.
Shortcomings: Not the fault of the AE but the phone.. It's wifi or cellular data, not both. So if hooked into the AE, you got no data. Not a biggie except if you were attempting to stream radio/music/media for audio in which case you're sunk. However, if you ran a wifi iPod maybe with Airplay, if they do those, that'd be cool.
So it was test only, as the AE runs on AC power. I did keep the Alpine pegged though and using the Helix remote for volume, and find that actually is far better, sending a pegged preamp signal to the Helix's AD converter.
Conclusion: Straight digital into these new DSP's is THE way to go. So my next experiment will be with the Parts-Express HDMI to Toslink audio-extractor. That would basically be a wired un-attenuated method, and actually an easier install as that box has a 5vDC input.
IMHO, sonically speaking, a conventional head unit with analog-only outputs is obsolete and necessary evil, if you don't go around it to feed a DSP straight digital. Head unit manufacturers would do well to offer at least a couple units with a toslink output, configurable for volume-controlled or just straight up digital.