Ideal Volume level

Actually, the issue isn't channel separation in a volume control but rather tracking between the left and right channels. Mass production potentiometers tend to track more unevenly at lower settings. If your knob runs from 7 o'clock (vol all the way down) to 5 o'clock (vol all the way up), knob settings at 8 or 9 o'clock will probably have more imbalance in volume between left and right than an 11 o'clock or higher setting.

Many high end preamps use higher precision pots that help eliminate this problem, but you'll get a ability to control your volume more precisely if your typical listing settings are in the middle to upper range of the knob.

As long as you are not overdriving things (and you will hear distortion or an unreasonable volume if you are) there is no problem in having a volume knob set too high.

There is no magic "o clock". All volume circuits would have to be identical in all gear. Actually, everyone would have to have identical systems.

At what volume your speakers perform best is a more likely determinant.

Same for your amplifier's output.

it's more a dynamic range issue. While said tracking differences may be an issue, I have yet to hear any preamp suffer from this effect (ie enough channel imbalance to notice center fill shifting)..that would have to be one hideous potentiometer!!!!

when you rotate the vol knob from zero sound on up you are raising the smallest parts of the signal out of the noise floor. When you do this you are increasing the dynamic range; those subtle signals give rise to microdynamic expression... ( in preamps we are paying dearly for signal attenuation and very low noise floor, if you want neutrality...if you want coloration this-ish PLUS something else)... I firmly believe this is the essence of "sweet spot". It is system dependent as others have mentioned (amp, speaker sensitivity, overall system resolution)...
I notice that my sweet spot moves to the right for every pint consumed, YMMV. TGIF!

I cannot turn the volume knob on my previous Plinius preamp past 10 o'clock or I'll destroy my ears(or burn something). I have the volume knob on my current ARC LS-16 preamp at 2 o'clock when I blast the system, well for just a short period of time of course.

Just use an SPL meter and measure the sound levels you're getting. Recommended is at 75-80db if I'm not mistaken. Listening at over 100db for prolonged hours is not recommended.

You need to think of volume in reverse. If you bypassed the volume control you would get loud full blast unrestricted sound. A lot of people would assume no sound. When you have no sound coming out, the volume control is actually on full. All a volume control does is attenuates the output of the preamp.

Everything is system dependent. The person who wants to have crystal clear blasted rock and roll is not going to build the same system as the person who wants crystal clear jazz played softly as background music.