Hi, I have the same issue/question, with the wired headset (no volume control) and the volume on the Hero set to minimum it is still too loud for my ears...
Also, using the handsfree setting, the same seems to happen, it is too loud, even at the minimum volume setting...
Only option I guess is to use a bluetooth headset...
(or a software tweak to influence the levels, but I can't find one...)
Cheers,
Tonv