I think what Alchemy meant is that you don't want the preamp to be supplying so much gain that the iRiver has to be set to negative gain to compensate, as the iRiver really can't attenuate an incoming signal and if run in the negative gain range will clip while the meters still indicate good levels.
So, good practice would be:
Set the iRiver's gain to 0dB.
Crank the preamp as high as needed to get the levels you want.
If levels are still too low with the preamp cranked all the way, start adding gain with the iRiver. But never run the iRiver at negative gain. Turn down the preamp instead.
Alternatively, if you use the safety setting in Rockbox, you could set the iRiver to ~ +6dB and then crank the preamp to the needed level. Then if things get a bit louder, the iRiver's gain will be turned down as needed.
Safety won't work if you start out at 0 dB - it will lower the iRiver's gain but the incoming signal will still be strong enough to clip the A>D.