Magical Lineage says:
Benefit: Pick one spell when you choose this trait. When you apply metamagic feats to this spell that add at least 1 level to the spell, treat its actual level as 1 lower for determining the spell’s final adjusted level.
Arcane Bloodline's Bloodline Arcana says:
Whenever you apply a metamagic feat to a spell that increases the slot used by at least one level, increase the spell’s DC by +1. This bonus does not stack with itself and does not apply to spells modified by the Heighten Spell feat.
If I apply "+1 spell level" metamagic (such as Extend Spell) to the spell chosen with Magical Lineage, does the DC of the spell increase, even though the final adjusted level of the spell remains the same as that of the base spell?