No, we just set the volume to 0dB for the line out. Its actually fully adjustable though, so you could pretty easily hack up the source to change the line out level if you want by just calling audiohw_set_lineout_vol from inside the audiohw_set_master_vol function.
And while I don't mean to pick on you guys since this seems like a common misconception, but line out doesn't 'bypass' anything, and you certainly are 'double amping' if you hook up another amp to the line out. On modern electronics, a line out is basically a second amp that has its volume adjusted independently of the headphone amp for use with powered speakers. Its to prevent you from blowing out accessories while allowing the DAC vendor to save money by not including the whole cost of a second headphone amp. Usually its just a cheaper amp that doesn't need as much current capacity since its discharged into a higher impedance load then the main amp. Unless something is weird with the design, the output into a high impedance load should be identical. Given how well the Classic's headphone amp drives a high impedance load, there is almost certainly no improvement from using the line out.