Actually, that's a good point. I have not tested it yet, but the line out from the dock (i.e. from the bottom of the iPod, and not from the top earplugs socket) is supposedly a completely different story. Everybody I spoke to reports a much better signal there. And, if you have a device who is actually reading the digital raw stream off the ipod, then quality entirely depends on that external device.
Now, I am planning to test the dock asap. I do not have one and I am reluctant to buy one at this point. But I should have a some occasions to test it anyway.

Also, for the records, today I tested an iPod 80 GB from almost two yrs ago, and it sounds louder than mine. Not much better in terms of quality using Apple standards earplugs, but definitely louder than mine at max volume.

wfaulk, as to the impedence, unfortunately I do not know. As soon as I have a second I'll report the model names here.