Set the volume on your ipod to about75-90%, then adjust your Onkyo to pure direct stereo, or Dolby Pro Logic II music if you want surround, and you should be all set.
I don't own any Onkyo AVR, mine is the Yamaha RXV2700 and I have the option "2/7 channel enhanced", what it does is to improve the audio from any source (including MP3's) ...Do you have the same option???When I was reading reviews and contemplating the purchase of this receiver one of the positives was that it allegedly improved the quality of MP3 playback. Any advice? Right now I have it set for all speaker stereo, but the quality of CD's is markedly better.