What myself and PJPro have said is that a DAC will not improve the sound of a low quality file, if anything a DAC will do the opposite and make it flaws all the more obvious.
As for low quality and low bit rate, I take your point Method Man. I have used the two terms as one. You are right that a lot of new pop music is recorded with low MP3 bit rates in mind and so will actually sound not bad at all. Furthermore, a study of American students found that many prefer the bright sound of low bit rate pop music, as that is what they are used to.
So, if you have a music file collection of classical/prog/jazz or any music with an emphasis on recording quality and high musicianship, then you will notice low bit rates more than if you a youngster who likes X-Factor style music.
(I am not saying that X-Factor is low quality music compared to one of the great orchestras, as some kind of music snob. I am talking purely of bit rate comparisons)