I emailed Doug earlier today and asked him to elaborate a little on this matter, here's his reply:
Hi Scott, my understanding is that gain adjustment is a PGA and not digital manipulation of the signal data post conversion, that would be exactly the same as boosting levels with a DAW. The reason to use as little front end gain as possible is to both reduce the odds of overload and reduce the amount of hiss. Think of the front end gain adjustment as an input trim control on a sound recording console. The key point is the analog signal does not pass thru the rotary controls, they are digitally controlled but of an analog signal path. I know this for a fact for the front end as I traced out that circuit and know how it works. This is well done as it avoids any digital level changes in the critical preamp section. I am very impressed with the R44, Edirol did a very good job with it, gain control is just one example of their superior engineering. I looked at the block diagram and now understand why everyone is so confused, that diagram seems in error. I have never seen a limiter, for example, placed after signal level adjustment. One typically uses a limiter before a circuit that can overload, not after. However, Edirol does not release service manuals and I have not traced out that part of the circuit. I do suggest you do a few test and let your ears deice what works best for you.
I hope this helps...Doug