III. Conclusion
1. PCM to DSD upconversion is a DSP process. The signal output is measurably different.
2. Noise shaping pushes the DSD quantization noise into the ultrasonic frequencies as expected. In DSD64 it rises above the noise floor almost right at 20kHz, and in DSD128 it starts around 40kHz. (I vote for pushing it up to 40kHz as less likely to cause distortion through the amp & speakers.)
3. Pre- and post-ringing is similar to standard PCM with upsampling using MC19's algorithm so this would not explain any audible differences.
4. The algorithm used in JRiver MC19 does a good job with maintaining classic measurement parameters like frequency response, dynamic range, and distortion from 20-20kHz - basically this means the math is as expected and fits the DSD output profile. Results are similar to the KORG AudioGate software converting PCM-to-DSD.
I can't help but wonder if what's happening here is like tube amps and analogue playback (eg. vinyl). Objectively the DSD conversion adds distortion but the anomalies are not perceived as objectionable and in some material, the added noise and imprecision actually makes it sound less "sterile", "clinical", more "real" (conversely being in an anechoic chamber is disturbingly unreal due to the profound silence). It would make sense to me that some people could prefer DSD64 over DSD128 upconversion since DSD64 will give you more of that distortion. Even though the noise is ultrasonic in nature as measured off the DAC, nonlinearities in the playback system like your headphones and speakers (perhaps certain amps as well) could create audible intermodulation. Maybe for certain music, this could be especially beneficial.
Out of curiosity... For anyone out there with the EMM Labs DAC2X which upsamples to DSD128, it'd be great to have a look at what the measurements are from that unit! With all the positive press about how this DAC sounds (ahem... $15.5K), I have yet to see any measurements... I wonder what a 16/44 impulse response looks like for example to see if it bears similarity to what JRiver is doing. How about the ultrasonic noise with DSD64 & analogue filter strength? Does the EMM upsampling process for PCM result in similar frequency response pattern?
In any case, give this PCM-to-DSD process a try at some point when you can. If nothing else, at least to say you've experienced it... See if you can perceive a difference and/or judge if it's beneficial for yourself.