I too find this interesting.
What kind of distortions do you hear? I've read before that analog clipping and digital clipping are two totally different beasts. When you hear the cracking sound of digital clipping, you know it, it's unmistakable.
I've also read that, technically speaking, digital audio has no headroom because there is no margin for overshoot. 16-bit audio has a ceiling, there are no more bits to designate going past that ceiling. The engineers are suppose to design the electronics so that the entire dynamic range of the signals being reproduced fits within the limits of those electronics.
I can't help but think of all those midi files out there that have track volumes set higher than 100. Trycho midi files are notorious for setting all track volumes at 127 (at least their first generations did). That's a lot of editing.
-mike