I often dream of "what if" scenarios and already came up with 2 ideas:
1. If I'm not mistaken, you could get an optical TOSLINK "Y" adapter and use that in in the path to the PXA-H701 to allow you to switch between the DVA-9860 and the external digital source. I think I've seen those for sale both on eBay and perhaps MCM Electronics or similar.
2. You could get a non-working/junk Alpine CD changer or whatever and leave it connected to the Ai-Net bus and simply keep the TOSLINK connected to your external source. The reason for that is that you need a device present on Ai-Net to be an "active source" to allow the function.
If I may ask, why are you not buying the RUX-C701? Are you not using the EQ settings and all those powerful functions you have available? Just curious....
Personally, I think you ought to call tech support at Alpine and verify your options.
Good question, though!