Sounds like what you were aiming to do is more consistent with how people use the Sansamp. For grins I've run mine through my PF-500 after seeing Dino do it in a video. Worked fine but wasn't additive to the PF-500 other than to engage the overdrive so I never bothered to do it again. I do recall having to push the volume up a bit, but the PF-500 is a better sounding preamp (under cans too), so it didn't seem warranted.
To me this unit shines either as a true DI box live (like JimmyM talks about in this thread), for recording, and as a standalone headphone unit for practice. Under phones I haven't had any issues with gain overloading the front end. Maybe yours was a defective unit? I've seen some other posts complaining about it too, but that's not been my experience and my unit is from one of the initial runs that shipped. For comparison, I run my passive and active Fenders with volume knobs fully open and it's perfectly clean in bypass mode (though louder than I need) and with the EQ engaged. Clicking in the EQ, volume at noon-1pm will match the bypassed signal level. That's louder than I need, but it's still not distorting at those levels. I usually run the EQ volume at about 10 o'clock. For further reference, I use Senn HD280 Pro and ATH-M50 phones. Bummer it didn't work out for you. For me, this unit ended a long quest for the perfect headphone solution.