Transformer based passives vs passive stepladder

The problem you have is that all passive devices will have an artifact unless they are directly at the input of the amplifier. The reason is that the interconnect cable, even if very short, plays a major role in the results that you get. Resistive passives cannot control the interconnect cable and so loose dynamics and bass impact at lower volume settings.

The problems that transformer units have are bandwidth and hysterisis loss. Hysterisis loss is a phenomena of transformers wherein it takes a little bit of energy to change the polarity of the magnetic field as the signal does the transition from one polarity to the other (this energy comes from the signal itself). The result is low level distortion and low level signal loss.

In either case of transformer or resistive control, if the sound quality changes depending on the setting than then you have a problem regardless of setting!

Unfortunately many active preamplifier line sections have enough of their own artifacts that passive devices are often preferred, but ulitimatly a properly designed line section will easily beat the best of the passives.

The problem is that you have to control the volume somehow. In active line stages and in the case where the passive is at the input of the amp, there is no interconnect cable that has to be controlled. It does seem that the interconnect cable (in tandem with the input impedance of the amp) is playing a huge role.

Problems come in if you want a different input and to a lesser degree if you have monoblocks. Passives make this inconvenient. A proper line state OTOH *should* allow you some distance from the amplifiers plus provide switching capability.

Back in the old days there were standards for input levels and the like, but that seems to have gone out the window with Digital Winter- almost as if digital would be the only thing you would listen to, so many CD players and DACs have high voltage outputs as they are intended to drive the amp directly. Its a hubris of sorts (it may be Digital Winter but I find new LPs all the time) and you wind up with too much gain if a line stage gets interjected. I understand that money is always an issue but it remains true that you get what you pay for. I wish more digital gear had jumper switches like the Wadia stuff that would allow you to select different output levels- it would make this stuff easier!