There is also the physical connection compatibility to resolve.
The U-DIO8 uses a "dB25 to BNC cable (SPDIF version selected)", but the Cambridge Audio DACMagic Plus DAC's use coaxial connectors. So you will need BNC Female to Coaxial (RCA) Male converters, which will add to the signal path and need to be the correct impedance etc. There would be a similar issue on the input side as well. S/PDIF via a BNC connector is not something I have come across.
So, the USB connection back to the PC supports concurrent two-way operation, both input and output over the single cable. Pretty nifty for such a small, inexpensive box.
I had a good look at the U-DIO8, including reading the manual, and this was the bit that was least clear to me, although the specs do say "Capabilities 8 channel PCM Input (recording) and Output (playback) over USB".
But a USB 2.0 connection carrying 16 channels of 24/192 PCM audio seems pretty impressive. (24x192,000x16)/(1024
2)=70Mbps. Not that it doesn't have the peak bandwidth at 480Mbps, but USB 2.0 maintaning 70Mbps throughput is impressive. Also, I wonder if it does send and receive that data simultaneously. It has an internal clock, so I assume it has some internal buffering, but there is no memory mentioned in the specs.
So you would have DirecTV outputting via coaxial cable, connected to one S/PDIF Input on the U-DIO8, and that could be carrying stereo PCM or 5.1 Dolby Digital. The audio would be played to the MC WDM, which should manage either format.
Then you want to use a USB input from the "PS Audio phono preamp", which would be a second input for MC to handle. Or you could use the "S/PDIF Digital Output" connected to a second S/PDIF Input on the U-DIO8, as that is just stereo PCM, correct? That would also have to play to the MC WDM, and you would need to manage which channels MC used for each source, using Zones I would think. There is no channel mapping in the WDM to select "Channels 1 and 2 for DirecTV" and "Channels 3 and 4 for Phono" for example.
It sounds do-able, I think, but you may hit some issues. For example, MC may have some issues if there are connections on channels 1, 2, 3, & 4. But as you are output 5.1, maybe if DirecTV was input on channels 1 & 2, and Phono was input on 7 & 8 which are not used by 5.1 audio, then MC would be fine, with some channel mapping in the appropriate zones. Whether and how this worked would depend a lot on the U-DIO8 driver capabilities as well. You may wish to look into that before goig ahead.
The U-DIO8 also does "Asynchronous sample rate conversion to match incoming sample rates (32 to 216kHz) to the recording sample rate selected on your PC", but as you are outputting to the MC WDM, which doesn't set the sample rate but just accepts what it is given, at least in Exclusive Mode, there may be some issues there. You don't want to use Shared Mode if you can avoid it, as Windows will then do another conversion on your audio, to whatever you set as the Shared Mode default. Again, can the U-DIO8 driver on the PC output in Exclusive Mode?
If you do go ahead with this I would be interested to hear how it goes. It is an interesting solution for providing alternate inputs to MC.
Disclaimer: I may not know anything I'm talking about in this area. I just had a look at the products you plan on using, made some assumptions, and a few guesses. It is entirely up to you to sort out if this will work!