Sorry I have to say this is not true. No analog gain control is involved here. All is done digitally.
When EQ is turned on, software filter digitally reduces the volume, to make a room for EQ to work without digital clipping. This volume reduction, unlike digital volume control via the DAC, leads to data precision (=resolution) loss.
I didn't test it thoroughly though, whether it just reduces the volume or compresses the dynamic, but it does not really matter in the sense of loosing sound data precision either way.
Your satisfaction just proves the result of recent investigations that show that more and more people preferer digital distortions over clean sound. E.g. they like CD more than hi-res or analog sound, prefer MP3 with low bitrate to a CD with full dynamic... Rockbox with EQ on players like DX90 is the same sad story. This also explains why people prefer old multi-bit DACs over current delta-sigma DACs. Historically, this is similar to preference of "tube sound" over "transistor", even since the latter started producing clean enough sound (e.g. MOSFET)...