will the audio signal only ever go into clipping if you exceed 0db on the output volume?

Yes, if the EQ is flat. If you boost certain frequencies in the EQ, the audio signal will clip with FSD signals of that frequency even if the volume is slightly below 0db. (That's why the usual recommendation is to EQ by attenuating the frequencies there's too much of, rather than boosting the frequencies there's too little of.)

i was therefore assuming that the head unit audio output would work in the same way - as the volume rises so too would the voltage of the signal. i didnt realise it was a constant 4v.

The voltage does rise with the volume. The output stage of a car-player will clip if asked to go beyond 4V. Setting the volume to 0db (with the EQ flat) and feeding it a FSD input asks it to go up to exactly 4V. Setting the volume below 0db will mean it's never asked to go above a certain lower value. Setting the volume above 0db will mean asking it to exceed 4V on FSD signals (it'll refuse, and clip), but not on quieter signals.

Peter