Hmm, I hope for you that it's not a hardware issue.I think the next step I need to make is checking all my cables and other possible issues not related to the AX8. I just really think it’s something internal in the AX8 since the combo amps sound great on their own. It’s almost like the AX8 is sending some extra gain on distorted settings because in clean settings I’ve tried with four cable method or direct into the loop return on the combo amps sounds good. It’s really weird. I’ll definitely let you know how some of my other test come out to hopefully troubleshoot.
Just a thought:
if you say "extra gain", maybe just try to change levels on Out2?
First try would be the knob setting, and you can also set a Pad in the I/O menu.