Busted!

How are you getting the feeling it is happening at the DSP and not the output? Are you tapping the audio stream as it is leaving the DSP? (Note: I didn't even know if this was possible, or the internal processing order. Just curious.)

Can you reproduce this in the home settings by copying the exact configuration to a home EQ setting with a standard kernel? This would eliminate the fader and the hijack code.

Lastly, is there a way you can put a scope on the output to see the signal? Worst case, record in through your soundcard and view the waveform with ProTools, Sound Forge, Goldenwave or equivalent. Just a visual verification that you are seeing clipping.

Additional: Also, can you verify what frequencies the clipping occurs on by using test tones? Is it across the whole spectrum?