Oh, so your end product is analog, you are not going to digitize it afterwards, so you are not doing anything with the digital data? The 16 bit requirement gave me a wrong impression first
.
If you need an MCU to act as a master to toggle some command signals (like: initiate the conversion by pulling chip select low, then toggle clock line - it will be super simple, with no actual data line going through at all!), it indeed doesn't matter on which side it is; pick the side which seems to be easier to implement, depending on your design details.
So its either:
ADC -> Isolation (data) -> DAC
^
MCU -> Isolation (ctrl) ----^
Or:
ADC -> Isolation (data) -> DAC
^
^----- Isolation (ctrl) <--MCU
Are delta-sigma modulators good for BW resolution product this high (I don't know, haven't personally used)? If yes, it would be the easiest solution, with fewer signals to isolate.