The 1/8" out is 10db less than the XLR out, but it isn't -10dbv vs. +4 dbu (think I've gotten those units right, I've forgotten offhand--at any rate the difference between a -10 consumer signal and a +4 pro signal is something like 11.6db, not 14db as they are actually measured with slightly different units).
Anyway, the 1/8" signal is not attenuated, the XLR signal is boosted as part of making it balanced again. The 1/8" signal is cleaner (as the internal circuitry is essentially unbalanced, so this signal comes more or less off the main gain stage). The XLR signal is sent through some additional circuitry (transistors I believe) to get it back to a balanced state, which is what boosts it 10db compared to the 1/8" out.
Since the 1/8" out goes through less circuitry, and since the SBM1 volume control is an attenuator (thus the signal goes through less of a variable resistor at higher settings--meaning best signal quality is when SBM1 is set to 10), I've always felt that running 1/8" out of the MP2 into the SBM1 is the best way. That's the way I always ran it, probably did 60-70 shows and never had a problem with a bad connection with the 1/8", ymmv.
-Todd