There is a recognised minimum line out level
I didn't know there was a minimum; I only knew that they vary as a wrote "(well almost)".
Ive done a little test; I was at a mates house earlier, we plugged both players into his mixer and tested the difference (ran EQ flat) (he doesnt have a dock, but a lead which plugs into the underneath of the I-pod, so it is still using the lineout). There was no great difference. The track we played made the most difference. Although not a science lab I think it was fair; all music on CDs doesnt tend to vary more than 3 db. We also played the same track and cross faded between them. What did have a higher line level than the I-pod and the HD3 was his professional CD deck. It killed them both in quality and output.
I personally dont think theres a difference to rave about in terms on line-out level!
Conclusion: Theres almost no different. (In line-out level)
However, the I-pod may still have a better earphone output (Original topic), (we didnt as far to test that). Thing is Ive never had an issue with volume, my HD3 is too loud as it is, I cant bare it at max volume, if you can your most likely damaging your ears.
Anyway after all this- going back to the ORIGNAL point; the amp in the HD3 must be capable of higher levels higher than this term 5mw. We can prove that the HD3 must be able to output a level as high as the 20mw I-pod as when we plug phones into the HD3 they distort with line out switched on, and at max volume on the I-pod they may little.
This is NOT to say that the HD3 or I-pod has more power, if anything I would say that the I-pod potentially has more power (but I have never made any comments against this, just that the output of HD must be more capable of 5mw). Weather that ever gets used or not is another matter.
But forget the I-pod Vs HD contest; I personally think they both have a great output.