IMO, you would check for any noise difference between low/high output level vs. high/low record level. It'll probably be a wash on any reasonable settings. Careful listening with headphones should do. My feeling is that a higher playback level should help keep the signal-to-noise lower down the chain, but I suppose it assumes the playback amplifiers are good. I have no scientific tests.
Take a worst case, a very low output setting, and you have to turn the next input setting (and noise) way up.
It's also possible that the highest output level might clip the signal on a hottest possible tape, in which case you don't want the highest output setting.