Would it be wise to turn the amp up to like 80% (so its not clipping) and change volume with the DAC?
That actually depends on the way the amplifier is constructed.
Most amplifiers have the volume control in front of the gain stage.
The result is that it is not possible to clip the input signal at low volume levels but as a downside has the highest self noise which is not (or marginal) volpot position dependent.
The reason it could be wise to turn up the volume of an amp in this case and adjust volume with the DAC in this case is the better channel balance of the digital volume control.
The best way here is set the volume of the DAC to max. Set the amp vol. control so it goes as loud as you want it and then adjust the volume digitally. There is no benefit in S/N ratio.
Something like the O2 or Atom have the volume control after the gain stage. This has the disadvantage that one can clip the input signal even when the volume control is all the way down. Selfnoise is the same as the amplifier described above when the volpot is fully open and the same op-amps and gain is used. BUT the selfnoise of the amplifier becomes less when the volume pot is set lower. Of course there is a limit so selfnoise will still be there.
The reason it could be wise to turn up the volume of an amp in this case and adjust volume with the DAC in this case is the better channel balance of the digital volume control.
The best way here is set the volume of the DAC to max. Set the amp vol. control (lowest gain) so it goes as loud as you want it and then adjust the volume digitally. There is no benefit in S/N ratio.
Then there is a rare breed of amplifiers (think Meier) who control the gain of the amplifier.
When properly designed it should not clip the input signal and has a lower self noise, distortion and wider bandwidth when the volpot is turned down.
The reason it could be wise to turn up the volume of an amp in this case and adjust volume with the DAC in this case is the better channel balance of the digital volume control.
The best way here is set the volume of the DAC to max. and adjust the volume on the amp.
As has been mentioned above.. the seemingly higher distortion is basically a measurement artifact. It is caused by the signal to noise ratio.
Note that the choice of opamps and volpots (linearity/tracking not SQ) can be poor to excellent with all 3 designs.
The Meier tested on ASR does not perform better than some cheap headphone amps. Should the designer have chosen a better design and better parts he could possibly have been at the top of the charts.
Also note that all of this is really only of importance when one uses really sensitive headphones. With normal sensitivity headphones the noise floor is below the audible limit and not of any consequence except in the measurement plots.