I'm going to guess at a few things:
1) The meters probably respond to peaks, and stretch them out visually. You can distort peaks quite a lot before hearing anything (the BBC PPM spec ignores distorted peaks shorter than 2.4mS.
2) You're feeding a guitar amp, not a hi-fi system. You could probably get quite a lot of distortion before you either noticed it or cared.
3) The input metering is probably not very sophisticated and should be viewed as an indication of high levels, rather than a panic situation. Ears are usually best.
