Regarding volume control in Digital Vs the Analog domain, I recently heard the $25k Krell CD/PRE which both digitizes all auxiliary inputs and performs volume control in the digital domain...It sounded very poor on both CD and as a Pre-amp.
A well implemented analog domain volume control will easily out perform digital domain...in fact I have not heard a good one yet...they may need to go to higher resolution 32 bits plus even to rival Analog.
We compared two well implemented analog domain volume controlled units to the Krell....The inexpensive OPUS 21 at $3.5k and the Meitner DCC2 at $10k. Both easily surpassed the $25k krell on CD replay. Considering the cost of the Krell and the high regard it is held in, it came as quite a surprise.
Given that most line level pre-amps dont actually amplify anymore..ie they are attenuaters and typically operate in the -20 db range, the dacs / attenuator chips I beleive need to be 32 bits wide or more !!