[Anthony]

Your assumption that this is a signal circuit are correct. It's a passive signal circuit, so it eats headroom in your overall amplification chain -- however, it is still more efficient to do it this way than at the speaker.

Okay, onto the circuit: Ground for both would be the shield conductor or black wire on a twisted pair RCA cable. Red in from the preamp to the pot body, red to the power amp from the wiper arm in the pot.

The outer middle and outer pins on the pot are usually the in, wiper, and out of the potentiometer. IIRC, 1 is the in, 2 is the wiper, and 3 is the out. 1 to wiper + 3 to wiper usually sum to the same resistance. However some pots are different, so someone with more experience on these should chime in.

the position of the wiper sets the resistance from 1 to 2 and the remainder of the pot creates a resistance from 2 to 3. So for a linear pot, it wouldn't matter if you have 1 and 3 reversed. However, some volume pots are logarithmic and I have no idea which end is which then.

I probably added more questions than answers, but I hope this helps some.