We have discussed this with relation to the Z1/FX1 before, and I suspect the main issue here is the impedence of the headphones (unless something is truly wrong with the camcorder).

When I shoot our opera performances I strive for peaks around -3dB like DSE suggests in his post above. I am monitoring this via the Z1's headphone output using a pair of Sony MDR-V600's. If I turn the headphone volume up any higher than 4 or 5 clicks below the maximum it becomes painfully loud.

The V600's have an impedance of 45 Ohms: http://www.bhphotovideo.com/bnh/cont...ughType=search