I usually listen at moderate levels so the volume dial on high gain is pretty much set at 9 o'clock, 10 if I feel like "cranking" it. 12 o'clock is crazy loud. How do you have your Fun connected? I use optical out of my MacBook so I get line level output. If you use usb I'd suggest you check that volume on your mac is set to maximum if it isn't line level. Also, make sure you have your Utilities>Audio Midi Setup configured to match your best quality flac ie 94khz, 24bit (quit itunes entirely before changing these settings).
Lastly, flac is a lossless format. The only thing you're changing with those settings is the output file size (which requires more grunt to achieve smaller sizes), but the quality is unchanged.
I'm using USB; think I'm getting line-level output as well though (changing the volume has no effect on the music).
I had no idea my Macbook had optical out, thanks for the heads up!
Ah, I misinterpreted "compression level" then, thanks for the clarification.