I splurged and bought the MDS-503 last weekend. When I got it home I opened up the case right away (before even trying it once), and looked at the ATRAC chip, Unfortunately I couldn't find it, the thing that looked like it ought to be the ATRAC chip was labled as a RICOH <something>-01H3B chip. But the service manual schematics indicate it has SONY CXD-2536B, which is actually a later revision than the ATRAC 3.5 chip in the MDS-JA3ES.
In the store I spent a while comparing this deck to the new Denon DMD-1500, which the guy at the shop felt had better sound. We digitally recorded a 2 minute segment from a 20 bit super bit mapped CD onto each deck, then hooked things up for A/B comparison with a pair of high quality headphones. We put each deck into single track repeat and I sat on the floor and A/B'ed them for 15 or 20 minutes.
The Sony was slightly louder than the Denon, throwing things off a bit. Since I had been told the Denon was better, I listened closely and tried to imagine it was, and maybe it was, maybe. But I have to say, to hear the differences you have to be willing to split hairs. I could not convince myself that the slight differences that might be there made the Denon worth it.
Things the Denon had going against it were: More expensive (JPY66000, vs. JPY60000 for the Sony), keyboard remote not available, no "time machine" function, possibly some other functions missing that were availble on the Sony (e.g. smart-space). Further, there seems to be no "type-ahead" on the play button, so you push in an MD and you have to wait 9.8 seconds (I timed it), until the unit is done reading the TOC before you can hit play. This seemed a bit clunky to me, and the Sony did it right (push the MD in, hit play, starts playing as soon as it's ready).
So, I bought the Sony, and the keyboard remote (JPY6000), and have been playing with it a few days. It's definitely a nice machine, and the accuracy with which you can set the track marks is excellent. They have a mode where the jog dial can be used to move in 60 millisecond increments, and while you're moving it the unit repeatedly plays back a 2 or 3 second segment starting at the current mark point to help you set it. It's really just right.
The time machine function is pretty neat. When it's in record pause, it buffers incoming sound in a 6 second ring buffer. When you push in the jog dial to start recording (instead of the record button), it writes the ring buffer to the MD and continues recording from there. It's neat, the moment you hit the button, the counter is at 6 seconds. So, you can hear yourself on playback saying "hey, let's try the time machine" and pushing the record button. It's gotta be useful for something, huh?
The only real botch I've found so far is the so-called "synchro-start". Other MD units (such as the Sharp/Pioneer) have a synchro-start which starts the MD unit recording as soon as the input signal appears. Sony's idea of synchro-start is one where the user must first own a Sony brand CD player with remote control ability. Providing you have this, the MD remote control unit has a button that can emit the codes to start the MD recording and the CD unit playing simultaneously. I'm sorry guys, this is not synchro-start, this is a marketing hack and a few extra lines of code in the remote. Sony, fix this, alright?
The keyboard remote works pretty well, although the keyboard layout is not quite big enough for easy touch typing. You can still enter stuff pretty fast if you are familiar with a normal keyboard layout. The keyboard remote only works with this unit by the way, they list all the units it does not work with, and that list is basically the list of every Sony MD unit with an I/R interface except for the MDS-503.
I would recommend the machine to others (I've only had it for 5 days however). Bear in mind that this is the Japanese model (I didn't look for the export version -- if there is one), and although the front panel and prompts are all in English, the manual is in Japanese, and the power is 100 VAC only (so it says).
p.s. as a footnote about Denon, I brought the Denon brochure home and was looking at some of their equipment. Do you know they make an $8000 CD player? And a $20,000 mono amplifier? I simply do not want to play in that league ...