But in real life, this seems to be a very theoretical issue. Considering the impact of speakers, listening room, amplifiers, source material (i.e. recording quality) and the design of the analogue parts of the DAC itself, it seems to me the upsampling algorithm in the DAC has to be very poor if external upsampling makes a significant difference.
That sort of analysis almost never works for sound quality issues.
If you have an imperfection early in the reproduction chain, then later stages - analog output stage*, amplifiers, speakers, and listening room only magnify the imperfection.
And thus, source material is the most important. (This is why I have no interest in Tidal, because for pre-1980 recordings, as a general rule - with some exceptions - the earlier the mastering, the better the sound quality.)
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* The DAC that I use comes in two flavors - one with a delta-sigma DAC chip and an elaborate analog output stage, and one with a multibit DAC chip, patented internal upsampling and (due to board space contstraints) a more simple analog output stage based on an IC-chip provided by the DAC chip maker. The latter sounds significantly better, especially on 16/44.1 material.