If your sound degradation is actually caused by DPS always outputting 16 bit at 44.1 kHz, then this also applies to version 2.0.
DPS uses DirectSound for output. Are you using something else like WASAPI when DPS is completely off? Because that sounds quite different in my opinion.
Have you made sure that no other effects in your player or soundcard drivers interfere with DPS (or only enhance/change the sound while DPS is completely off)?