As requested, I tested the performance of PW-Link when being fed digital in, and digital out. As noted by others, it indeed is able to perform its ARC Room EQ using this path. For kicks, I connected a Topping D50 to its digital output. Here are the results:
As one would expect, the external DAC significantly improves performance, reducing distortion products to below -115 (totally inaudible).
Not expected was the fact that I was stuck with the same analog output as the internal DAC. This means that the digital samples we are getting have to be attenuated or they overflow. This is a classical problem in signal processing in that the math can cause amplification of samples, causing overflow. The fix is usually to reduce levels (as we are doing here) and then compensate in analog domain on the output.
1.5 volt should be good enough for many amplifiers though so this solution is readily available. You can start with the internal DAC and if you have an itch for perfection, step up to an external DAC.
By the way, I could NOT power the Topping D50 using the rear USB jack on the PW-Link. It must not have enough power for it. The above test was with the Topping D50 being powered by the computer. Use of optical cabling has all but eliminated any sign of mains leakage/ground loop at 60 Hz.
Summary
You have a great, turnkey digital room EQ in PW-Link. I wish it had USB input though. Fortunately my PC motherboard has that output so I did not need a USB to Toslink bridge. This is so handy that I am tempted to go and buy a PW-Link for myself.