Thanks for your reply Justin. I did contact STAX to hear what they had to say about it. Their reply:
Thank you for your inquiry.
1. It is NOT recommended because it is equal to two pre amps under the same system, and repeated amplification may cause distortion.
2. If you still prefer this setting, you can try to turn the volume on STAX headphone amplifier to 12 o'clock. If you don't hear the distortion, you can gradually increase the volume, and then use the volume of another pre amp as the main control.
But the best setting is to connect without the pre-amp.
Hope the above will help.
Anyone care to answer as to why, to achieve a certain level of gain, two preamp sections would induce more distortion than a single preamp section? Me don't know...