I use exactly this setup (except my touch is a 2nd gen) and I use a Fiio line out cable to hook the amp to the touch. Make sure you rip your music to the touch at a decent rate (I personally use lossless but >=320kbs for the generalised win!) and it'll sound pretty awesome in my opinion!
Also bypassing the touch amp lets the iPod run quite a bit longer on a single charge!
That should be a nice and balanced little setup, I've always been a huge fan of the PA2V2. The guy who makes them is really nice and as someone who builds small electronics on the side and for circuit analysis in school, his pricing is spot on for the support he gives as well!