Hi,
I just listened to a 96kHz audio DVD with vlc (for the first time) and first I thought probably the recording equipment was bad, then I thought my cables must be broken, and then I feared for my speakers. So I got my headphones and reckoned my sound card must be crap.
Now after spending 40 minutes wondering how Robert Fripp may have been using bad recording equipment, the mouse cursor accidentally stays over the volume gauge and the tooltip says 160%.
So I turn the volume gauge down just below 100% (looks more like 10%) and suddenly my record isn't broken anymore.
Bottom Line: While I understand that allowing to increase gain may be useful, I think it should be a separate setting. Otherwise you ecourage 90% of your users to destroy their sound.