domo:
When using a DAC, would that be connected to the Arduino output, and then to the rest of the circuit?
The DAC would be connected to the Arduino via SPI or I2C depending on which DAC you used. Its output would feed the non-inverting input of the op amp, in place of the R-C filter.
domo:
Also if another Arduino board was to be used (such as Due, which has a DAC) does that remove the need for an external DAC?
Yes. AFAIK the Due is still the only Arduino board that has an integral DAC.