Well, I think the more correct way of describing this will be, the amp section adds a touch of warmness to the line-out. Remember that the line-out isn't just an output on its own. The same line signal feeds into the amp section as well.
Yes, what this means is that if you are using an external amp on the line-out, there is absolutely no need to mod the AD8397.
I just got my X3 and love it, but have been intrigued by this thread. Thanks ClieOS! Having had and/or modified high end home audio equipment in the past, I am fully aware of the benefits and gains that can be made.
But before I rush into anything (i.e. Ripping open my X3 and performing major surgery) you mentioned that if using the Line out with a suitable amp may give similar results. Do you or anyone have any suggestions of a suitable portable headphone amp that would make the sound more neutral? I guess I should be posting this on the help and suggestions forum..