The mics of the H2 can only stand 115dB, most studio-mics used for (closed-)micing drums have an SPL far beyond that. That's because drums (snare and cymbals as stated in this thread) alone produce peaks around >115dB and then there are 2 guitars, bass and vocals. As i mentioned the small space we're practicing in makes it more complicated.
So I'ld say this is just a normal situation for a rock band! Nothing special about it.
The Record-Level doesn't affect the analog input gain, so it's nearly useless.