When doing this (using RCA inputs) I can use the II gain setting as well. I'm not sure if it makes any difference to the sound quality? I guess II is 0dB and I is -10dB. I'm not sure but this might sound better. I'm not going to try III though because that would be too much.
For an unexpected reason, you will most likely gain stereo sound quality using the RCA inputs.
The reason is that often there is a degree of channel imbalance on analog volume POTS when they are close to zero. When you feed the high voltage input, you were having to turn the volume far towards zero — "
It’s a bit hot so I can’t turn it up past 9 or so". By lowering the voltage input so that 12:00 becomes the nominal position (whether that is level I, II, or III gain setting), it allows you to manage the volume POT without having to dip down into the lower range below 9:00".
Further, by gaining a greater range of motion, you are more able to fine tune the volume to the exact level you want it at. That would have a perceptual audio benefit.
But that should be the only audible and perceptual audio quality impact assuming the DAC's balanced and unbalanced amplification stages are both sufficient high quality with undiscernible noise floors. And if the two are not equal, odds are good that the unbalanced audio would be the one with higher sound quality.
[Edit: I just looked at the Amir's review of the SMSL DO100, and the XLR output was measured just an (inaudible) smidge above the RCA; so no inaudible penalty either way on this device]
(side note: I have the Monolith THX 887 which is virtually identical to this)