Yes overloading the converters on the way in is possible and it happens all the time. Have you ever clipped a signal? Did you like that nasty sound that hit your ears? That sound is digital distortion. It happens when you've overloaded the converter going in which just happens to be the A-D converter. You can find A LOT of info about this on the net, mix magazine, eq magazine, electronic musician, gig, etc etc etc. IMHO the best way to prevent would be to apply a compressor/limiter or REDUCE the gain going in.
recording to a digital format= 0db. ANYTHING above that and your looking at distortion.
recording to analog format= +6 to +9db depending on what sound is desired (+6 is the usual).
If you would like more insight or clarification I'd be happy to go in depth but remember the following. When your peak levels aren't high enough you're basically sending the unused bits of resolution to never never land.....or la la land...or limbo....You want to take advantage of your dynamic range while reducing peaks and transiets.
Now ask yourself a question:
"WHEN I RECORD AT 24 BIT (or 16 bit) BUT MY PEAK LEVELS BARELY HIT -6db AM I TAKING FULL ADVANTAGE OF MY 24 BITS?"
2 buss compression is usually applied to the stereo buss AFTER the song has been mixed down, during mixing or transfer to other format such as stereo buss compression while dumping to analog tape. You are incorrect when you say most studios don't compress on the way in. Compressing on the way in is a matter of engineers preference and to be honest most engineers I know and big studios I've been to DO compress on the way in. Ever recorded an electric guitar with distortion pedals? How about a drummer who isn't conssistant with his snare or kick licks? How about a bass guitar?
So let's say you have a nice vocal take but the vocalist peaked in two areas. Do you think adding compression after it's been tracked will reduce those overs? I hope you don't.
Let's say you have a vocal take you tracked with compression. It sounds even but it's squashed. Can you undo it? Nope.
It's a matter of taste and preference but IMHO you should track guitars, drums, vocals and bass with slight compression. Buss compression should be used when the song is mixed down/finished, but personally I'm against it now. Yes it helps prevent buss and summing overloads but the final sound doesnt cut it for me. besides the mastering engineer will do a better job at compressing your final mix.
You ever tried mixing a song while a compressor was inserted? Do it in pro tools and tell me what happens. Mix a song in pro tools WITHOUT buss compression applied. After you've finished mixing apply the compressor to the master fader. Take the same song (hopefully your working from a copy) and MIX it with buss compression instead of applying it after you've mixed it.
Tell me your results after you do it.
:hgk: