IMO, no contest -- LOD is far better than the audio out for feeding an external amp. As to how it compares to other iPods I can't say, but other than using something like the iStreamer or Cambridge ID-100, the LOD is the preferred way for me by a substantial margin.
BTW, using an ALO Cricket LOD cable and Continental amp with Shure SE 425 iems and it's a really nice combo with lossless audio files.
-- Jim