I'm not asking you to repeat yourself, but you have not actually answered the question and are in fact incorrect on several points:-
Line Level does not have to be fixed. I have and have had AV devices in which the line level output was variable with a volume control. When using a headphone jack output into an amp's line level input, that is also variable. Another example, using a pre-amp connected via line level to a power amp. One of the primary functions of the pre-amp is to vary the level. It's called 'volume control'.
It actually does rather depend on what iPhone. The iPhones 5 and later have a Lightning port and not a Dock connector and as I'm sure I don't actually need to tell you, they are completely different. Not only that, but the latest iPhones have no audio jack analog output, so all (wired) audio has to be through the Lightning port. This lack of headphone port may not actually make a difference to this question, but this variation cannot be dismissed since it directly relates to my question.
Are you sure Apple's Universal Dock has a built-in DAC? Why would they do that when the Dock connector includes analog audio. You may be right, but seems non-sensical to me. However, it is irrelevant to my question which is not about, nor anything to do with docks.
So far, I have found that every audio connection I have tried from an iPhone 4 (through its Dock connector/port, whether an actual dock or not is immaterial) to an amp results in the iPhone's volume controls being disabled.
However I have found a (Dock -> USB power and analog audio) cable whose supplier has stated that when using it the iPhone can still control the volume, as I desire. Whether this is actually true remains to be seen when it is delivered.
What I can confirm is that the equivalent Lightning -> USB + audio cable can charge the iPhone, play music to an amp and allow the iPhone to control the volume (ooh, variable line level, who'd have thought). That is fact as I just bought one and tested it and that is indeed how it works. So I will switch from trying to use the iPhone 4 to using a Lightning based iPhone as that can be used in the manner I require.
What is still unknown is whether the equivalent Dock cable can do the same. That has not been answered. Although no longer of vital important to me, it would still be good to know. But failing any actual answers here, it will have to rely on testing that cable I mentioned above. If it does allow volume control by iPhone, that will be good to know and means a Dock connector based iPhone can be used with a power amp (i.e. and control the volume). If not, I'll just forget the iPhone 4 and stick to the iPhone 5.