Is the issue number of bits of resolution above the noise floor rather than % of full volume? If it is simply a volume issue, any DSP or Amplifier the toslink signal is fed into can compensate for that easily.
I wrote the above several hours ago. Since then I hooked up my DUDU7 on my test bench to a Helix M6 DSP amplifier. It has a 10 channel DSP and 6 internal amplifier channels rated at 100 watts each and 4 line level outputs for an additional amplifier if needed. I set the head unit to SPDIF pass thru 24 bit 96kHz. used the optical output and verified that I can boost the gain of the incoming SPDIF signal in the DSP setup. Problem solved - sort of.
The remaining problem is that the pass through signal will only work for whatever music player you are using. Phone calls, navigation prompts, and radio will not be carried on the optical signal. The Helix has a solution. I have to run line level outputs using RCA cables from the DUDU7 to the Helix. The Helix has a setting for assigning priority for the digital and analog inputs. It can be set to interrupt the SPDIF music playback if there is a signal on the analog lines for phone, navigation, etc. The down side is that using analog inputs does introduce the possibility of ground loops and alternator noise. I won't know if this will be a problem until I install the system in my 2003 BMW 540i M Sport. These older BMWs have been known to have problems like this. There is a reason many of their older models have twisted pair wiring from the head units to the trunk mounted amplifiers. My model has a OEM DSP amplifier and the signal from the factory head unit is digital. I will be removing all of that. It will be several weeks before I get the system installed. In the meantime I will be running other tests on the hardware and software.
For those who are interested, Arc Audio also makes DSP hardware and software that does what the Helix system does and they are an American company. I tried one of their DSP amplifiers and really liked their software. Their amplifiers have a good reputation for reliable builds and excellent audio performance but I returned my Arc unit for reasons unrelated to performance. The dealer that sold it shipped me an obviously used unit but represented it as new. I decided to buy from a shop closer to home that would let me use PayPal to buy it but he is a Helix dealer. I liked the Arc Audio product well enough that I am going to buy one of their units used on Ebay and compare it to the Helix. I have a Quant Asylum QA403. Not as good as what Amir uses but within my means to enhance my hobby.