If you use the optical out of the DAC, then you are dealing in the digital domain and the receiver would use its DAC to convert to analogue. If your HK is 2 channel, you could use the RCA out unless you feel the DAC in the HK is better or need some conversion options. On the Soundavo, with USB in, the S/PDIF out acts as a converter and digital passthrough.
The Dolby feature on the HK is simulated Dolby. The 3490 does not have a separate headphone amp and actually uses the power amps for the headphones as well. That may be why you get the simulated Dolby on both headphones and speakers. The headphone out on the Soundavo will bypass this feature.
The HK manual says that the optical in only supports PCM signals (pulse-code modulation) which is standard for optical in. If all you need is a USB to optical converter, the Soundavo will work but there may be less expensive options that don't employ DACs and headphone amps. For USB to RCA I was considering one of the Topping DACs. Several units have been tested on AudioScienceReview.