I play an active bass. Should I have everything turned up on my bass's pre-amp then cut/boost frequencies on my amp? It seems like the better option because you can't boost frequencies that don't exist. What I'm asking is what are the flaws in this way of thinking about it? Should I have my bass as flat as possible then EQ on my amp head or should I boost all of my frequencies on my (active) bass and cut from those frequencies?
Yes, there are some major flaws. The EQ on your bass only covers a very narrow spectrum of frequencies. If you look at a bode plot of the response through the preamp with everything boosted, it would be anything but "flat". Furthermore, if you looked at a phase plot, you'd see that the phase of the signal was severely affected, which can add mushyness and smearing of the sound. After doing all that to the signal additional EQ on the amp is going to only make things worse.
Beside that, most preamps don't have enough headroom to handle the large amounts of boost - especially in the low frequencies. By boosting the bass 15dB or so, you really start running into headroom problems that can create unwanted compression in the least and distortion in the worst. Of course, that depends on the voltage output of the pickups and the rail voltage of the preamp, but most amplifiers have rail voltages of +/-15V - almost 2x that of an 18V preamp system.
You're right that you can't add to frequencies that don't exist, but the preamp on the bass is NOT adding those frequencies to the pickups; those frequencies you're adjusting on the bass' preamp are already there and can be adjusted at the amp just as well.
As has been stated, you should leave the bass "flat", adjust the amp to taste, then use the preamp on the bass for minor adjustments as needed. Need a little extra lows on a song, bump the bass-eq up a db or 2. Need more bite, turn up the treble a hair. Keep the changes small, unless you're after a specific tone that requires bigger changes.
Also, learn to use your hands to control the relative balance and shape of each note. Instead of boosting the bass control, learn to play nearer the neck. For more mid-range growl, play back more toward the bridge. Learn to use the pads of your fingers vs. the tips for different sounds. Everything will sound cleaner and clearer and more natural (less stuff going on to muck up the sound), and you won't have to rely on making adjustments to EQ while you're playing.