Finally spoke to NAD and have a thorough update. Instead of replying to my email they called me and were very polite and helpful.
There is indeed a firmware problem with some early C298 units. Luckily it’s not a hardware problem. It does not affect all units within a certain serial number range, so everyone just needs to keep an eye on their unit for malfunction.
As suspected, the basis of the problem is a false power protect trigger.
How to check your firmware version:
In operating mode: press and hold the power button for between 5 and 10 seconds. Once you let go, the power light should flash once, then the bridge mode light will flash a certain number of times. Early units like mine (both my faulty unit and the new replacement) flash seven times to indicate v1.07. The fixed firmware is v1.08, which would of course mean eight flashes.
NAD HQ sent out a service bulletin in late December about this issue. All distributors should know about the problem via the service bulletin. Not all service centers will have seen this problem before and may not be aware of the problem.
Any NAD service center should be able to perform this firmware update, but they will need a physical firmware update kit specific to this job, so if you contact them they will need some lead time to get the kit if they haven’t performed this service before.
Personally, I already sent back my faulty first unit but will keep vigilant on this second one and get it serviced if anything comes up. This will be covered by NAD’s warranty for two years (at least that’s how long the warranty is in the US).