Here's the same thing a different way:
There is a hole in the gain structure - the line in providers a certain range of gain and the mic in provides another range of gain (at a higher level). But...in between the highest line in setting and the lowest mic in setting... there is a gap. This gap tricks people into switching to the mic-in setting so they can get 'full range' on their meters.
Then the second problem kicks in - you throw a decent level signal into the mic-in setting and it overloads the preamp. It is too much for the preamp to handle and the signal just clips to maximum level of the preamp output (brickwalling).
Because the preamp and the a>d are separate, you can still adjust the levels when you're brickwalling, and they can be adjusted so that they don't clip the a>d, but they sound like crap because they're brickwalling on the preamp. If you had input level meters on the preamp you could see that.
So, any preamp can be brickwalled if you overload the input. The Sony DATs sucker people into doing that because you don't see enough level from the line in and then switch over to the wimpy preamp. Low sensitivity mics like CSBs tend not to overload mic inputs. The other alternative is to modify the input stage to address the gain hole.