There are other problems why the analog hole is hard to exploit:
1) Multi-channel streams are easy to grab in digital, but expensive to grab in analog - simple reason: six channels that have to be captured in exactly the same time, without offset. Most consumer-grade sound cards only carry one line-in, not three of them.
2) Power supplies in computing tend to be NOISY. I mean, REALLY noisy. So basically the PSU adds noise to the output DAC, and then the PSU adds noise at the ADC stage. It most definitely is a quality loss.
3) Naturally, headphone-outs and in a lot of cases line-outs tend to be engineered in a way that their output impedance can drive headphones, too. This can massively distort the signal.
4) Clipping. Hard enough to avoid when using a professional mixing table, next to impossible to avoid when ripping audio via the analog hole.
