An update. I received a message from Michal Jurewicz (member alias mehow), the designer of Mytek Brooklyn, with some remarks on my measurements. I wish I still had the Mytek to verify what he is saying but I am going to go ahead and provide his data regardless.
On the clipping, he confirms that it is the MQA decoder that causes the clipping. Disabling MQA decoder, eliminates the problem (graph in red):
The question I sent him which unfortunately he has not responded to, is why enabling MQA decoding impacts non-MQA content which I used for my testing.
It seems that they have a new dsp pipeline that includes MQA decoding and it is that new pipeline that now clips on non-MQA content. So to fix that, also means to give up on MQA decoding just the same!
That's not good. They should go back and properly integrate MQA into their decoding pipeline so that it doesn't impact non-MQA content. A simple check of the content flag for MQA should enable them to do this without a user switch to turn MQA on and off.
Of course it would be unfortunate if it overflows on MQA content but at least let's get the 99% answer right (i.e. non-MQA content).
On the second harmonic clipping, he says this is due to the attenuator (volume control) circuit which was intended to have a "warm" sound. Shutting off the volume control makes most of the second harmonic distortion to go away (graph in blue):
I guess this is their attempt to create the "tube" sound with those high levels of second harmonic distortions and at any rate, cater to subjective audiophile needs this way. Not my cup of tea. I want my volume control to be fully transparent and not inject gobs of second harmonic distortion into the path. If I want to distort it, I will do it elsewhere, thank you very much.
Above all, they should document all of this. People may for example choose to not use their volume control if they knew it acted as we have discovered.
Anyway, I appreciate the reach out and more information. My conclusion now is that the DAC is of higher quality the original stated within the constraints that these modified settings provide.