I've had some talk with James @ Effective audio mod about modding the DacMagic. He proposed some hard core modifications to the DacMagic that includes:
Install EA Ultima Clock for Upsampling feature
Change all critical capacitors/diodes and Op-amps. Add additional filter
capacitors to lower noise.
Install 3 pcs of Ultima voltage regulators.
For the upgrades above, the price is SGD$900, more than the DacMagic itself! Of course you can go with less component upgrades, and it should cost less than that.
Maybe one day we'll have an opportunity to try out James' highly modded DacMagic. 
He also does mods on other DACs and CD Players, so if you're interested, you can email him at sales@effectiveaudiomod.com.