I have that set up in my office. The sound is pretty decent at low levels. If you crank it up, you can definitely hear some digital artifacts in the signal.
Some people complain that the Bose radio sounds a bit bassy, and lacks some high ends. I'd concur with that, but it does not get to the point where it is really muddy.
It's not a bad sounding rig overall. But you can probably get as good a sound out of a cheaper option if you have not already bought the Bose. I use a Boston Acoustics Horizon Duo (the one with the iPod dock) as an alarm clock and am pretty happy overall (and it's much cheaper).