To answer your last question first, Bluetooth does not currently have a true lossless option, so any use of Bluetooth will create a lossy conversion of your original lossless files. In a technical sense it will no longer be CD quality. Whether or not that's audible is a different question.
It sounds like this will be your signal path:
Phone ---[BT]---> Topping BC3 ---[optical]---> K5 Pro
In this scenario the K5 Pro will be handling DAC and headphone amp duties because the stream will be digital until that point.
If you want to use the BC3's DAC, you will need to connect its line output to analog inputs:
Phone ---[BT]---> Topping BC3 ---[3.5mm line output - 2 RCA line input]---> K5 Pro