Hi Mike,
I had the original Octave and am due to get a brand new Octave II as soon as tmy dealer gets the next shipment in -- soon. The original was great, but the II is somewhat better in a number of ways, but definitely get the USB interface. This is no typical usb interface and believe me there is absolutely nothing to be gained, and some to be lost going through a usb -> spdif converter -- more cables, more power supplies, actually less isolation from the receiver section of the dac, and more. You also will need any type of usb isolation device, battery powered usb cable etc. -- it makes no difference on this receiver board.
The designer of this dac is calling it the Hex Jr as it fits into a single box instead of the two boxes of the original octave, has no power umbilical, has a redesigned dac board (essentially half a Hex wut without the balanced output capability), better receiver section, lower jitter, and some other improvements, and a very, very low noise floor. It is also a guaranteed 24/192 though usb and coax (still 24/96 via optical), and truly is a very unique NOS R2R dac with a very smooth, analog sound. These commercial telecomm dac chips are rated to 15 mhz sampling rates, but there is no messing with the incoming pcm data stream at all -- it goes directly to the dac chips with no internal conversion to and from dsd like so many other dac chips.
Yes, it's $400 over your target, but it will be well worth it, and should be a super sweet match with the hd-800s and the crack.
I unfortunately decided to sell my hd-800s as i too have been thinning out and putting all I can muster into my main system, and that meant getting rid of some headphones and such, and also because I really like the hifiman he-400s and want to upgrade to the 500s. There are tradeoffs for sure, but to me the hifimans just rank a bit higher on overall musicality, if not as good on the fireworks and soundstaging. Of course I still think extremely highly of the hd-800s, but for now, the amount of time I do or can listen to them does not justify their sitting around collecting dust.
If you can swing it, do give the Octave II a good look, along with the usb receiver option and you could be set for a very, very long time. I'm told it is an upgrade from the original Octave, which has been my favorite dac so far and easily went head to head with some uber expensive dacs from a certain well known British company. :-)
Good luck,
Jim