Not an answer, but addition to the original post by another.
I'm having the same issue here with the Apple's original in-ear(?) headphone included with the itouch itself.
There are two sliders about the sound volume set to lowest as same as he did. But nothing turns fine.
Listening to music with the level of the sound volume I mention actually, I have to take a rest for 1 hour after 15 minutes listening.
Of course, songs include ones downloaded from iTunes store.
Even some of the rest seem to be made by iTunes as mentioned in its tags.
And even while playing videos, playing games using a headphone happen the same.
So that normalizing the average levels of sound volumes of the sound files is not a perfect answer.
We'd love to modify the least level of the system-wide sound volume instead.
And that is the only way to solve the problem, I think.