How does iTunes volume control affect digital output?

I'm using iTunes on a Mini with an external USB DAC. The volume control and equalizer inside iTunes affects the volume so it must be processing the digital data in some fashion.
It doesn't appear you can disable the volume control so how do I know what, if any volume setting outputs a digital stream that has not been processed by iTunes?
intel mini   Mac OS X (10.4.7)   external Scott Nixon usb dac

I have a scott nixon and I have the same quesstion. Does the volume control slider on itune work in digital domain? if so, does it work by increasing/reducing the bit rate?

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