Using an amplifier with variable gain

I have an AudioSource Amp Two (80 wpc) that has variable output. I've had it for the last 5 or 6 years. Anyway, I've always put the gain at maximum. So, I control the volume using my preamp, but I can't turn the volume knob much past 2. Today, I was thinking about it, and I decided to turn down the gain on the amplifier to about 50%, and then turn up the volume on the preamp by a corresponding amount. My question is which situation should give the best result, in terms of sound quality? It' not easy for me to tell by ear, as I'm sure most of you would recommend to just listen. Is there any theoretical reason why one setup is better than other? Any advice is much appreciated.
Using both gain adjustments simply puts both potentiometers into the signal path. Running one wide open and using the other to regulate signal amplitude should theoretically lessen the chances for signal degradation. The one factor that i can think of that might alter this is if the input impedance of the amp it lower than what the preamp ( or source if going direct drive ) wants to see. In this case, reducing the gain on the amplifier may be beneficial, as it could raise the input impedance of the amp somewhat. How beneficial this would be would depend on the amount of gain available from the preamp or source, the impedance range of the gain adjustment on the amp and how that adjustment was implimented in the design of the amp. If using "standard design" SS gear, i would tend to think that running the amp wide open and varying the level of the preamp would provide the best results with less potential for a channel imbalance. Sean
Usually, a passive volume control set to its maximum gives the best sonic results... Therefore, my advice would be to keep the amp comtrols set to maximum and control the sound from the preamp -- the way you first had it. There's nothing wrong with not passing the 2 O'clock position on the preamp.
You should do as much amplification as possible before the power amp for higest signal to noise ratio, especially if the power amp is a good distance from the pre-amp. Set the power amp gain to the lowest necesary to get the volume you want from the pre-amp, without driving the preamp into distortion. Your setting at 50% is probably OK. What is the position of the volume on the preamp now?

Bob P.
The best thing (in theory) would be to use a fixed attenuator (couple of resistors) at the power amp input, so that both pots can be near maximum. However, in practice, unless the power amp gain pot is noisy, setting it lower than maximum will be ok. If it is noisy, use contact cleaner on it.
The gain control on the amp should be set to max, if you read your manual I'm sure it states this. If you were to bi-amp with more gain on that amp...then you might back it off to balance the sound.

If the power amp gain is noisy, sell's junk.

Inpep brings up some valid points that i overlooked. Kudo's to him for being on the ball.

The more signal that you pump into the amp, the less that line loss comes into play with the potential for a higher S/N ratio. You'll end up with both the preamp and amp potentiometers dialed at less than full gain this way, and depending on their quality and how well you can set channel balance, it could be better or worse. Try it both ways and see what you like best. This will be a system by system thing based on the individual design of the mating components, so nothing is set in stone. Sean