1. Does it involve buying a DAC? Yes of sorts (see below)
2. Is there anything you need to consider that'll form the start of a home cinema system? Yes. You really need to decide whether ultimately you want a separate stereo music system to some sort of AV system, or do you want one system that'll do the lot? The reason for this is that most AV receivers have the necessary inputs (HDMI and/or optical inputs) with their own built-in DAC anyway. So if you were going to have a fairly decent AV receiver doing everything ultimately, then in the short term it would be a bit of a waste of money getting a separate DAC that you won't need later on.
3. As for soundbars and receivers (this is only my opinion and others will disagree...) if you've heard a half-decent surround system, then a soundbar simply won't do. Only the very best soundbars can hope to compete, but the very best soundbars are also pretty pricey for what they are.
I had a similar stereo-only set-up to you some years ago (Cambridge Azur / Ruark Epilogue 2's), so can appreciate why you like your system so much. The Ruarks are so detailed and clear they make excellent TV speakers, providing you have a stereo source of course.
i'll share my experience with you if it helps any. i initially thought that I'd keep my 2.0 & 5.1 systems separate because I didn't want to compromise on stereo sound quality (which seemed to be the received wisdom at the time from forumites & dealers). So I kept my Ruarks on stands either side of the TV but also purchased a Monitor Audio Radius One soundbar which sat in front of the TV and the Pioneer receiver, sub & rear speakers.
The reason for this was primarily to have better control over the centre (largely dialogue-heavy) channel when playing DVD's and blurays, which was lacking in my stereo system. However, to my taste, I found that the Pioneer receiver/MA radius package was far better at music than I anticipated and had the extra benefits of internet radio, Airplay (which is how I use Spotify) and the ability to play music Blurays in surround-sound formats. So in the end I decided (somewhat mournfully) to say adios to the Ruarks AND the Radius One soundbar and buy the Radius 270HD floorstanders for the main left & right channels.
I'm extremely happy with the end result and I think I have a system that's a jolly good all-rounder for the money.
However visually, the 5.1 system does have more of an impact in the room than my former stereo system. It's not exactly discreet. And some forumites have tried AV receivers and have found their sound unacceptable. I'd recommend going to a dealer and listening to a decent AV receiver and surround sound set-up and listening for yourself, particularly whether you're happy in its ability to play 2-channel sources.
just one extra tip though...do ask the dealer to use the AV receiver's Extended Stereo setting (non-Pioneer brands may call this something else). This plays 2.0 channel sources through all 5.1 speakers, and in most cases sounds awesome on my system. I do alter the balance slightly in favour of the front speakers, which IMO is critical in making this sound natural. I absolutely love this way of listening to music & would really miss this if I limited myself to a stereo-only set-up.
Sorry if this comment is too geek-like & overwhelming, but you seem to be making decisions I was mulling over myself a few years ago. There are plenty of other threads on this site where many would advocate the exact opposite of what I chose, so demo demo demo & decide which path you want to go down.
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