[font=trebuchet ms]The eBay link in the first post is dead, of course, but I can make a pretty good guess about the item. Do you have any snakes that need oiling?

A passive (no power required) circuit that plugs into the effects loop can only attenuate the preamp signal before the power amp gets it. This would allow you to crank the preamp to get it to distort. That distorted preamp signal could then be reduced in level by the added circuit, and fed into the power amp from the effects loop jack. This is an external Master Volume.

The resulting tone would be entirely preamp distortion, fed to a lightly-driven power amp. It might be OK for metal, but for blues or Classic rock, it would suck ass. To get righteous power amp distortion at lower sound levels, you have to introduce attenuation after the power amp, or inside the power amp.

The most common way to implement the first technique (after the power amp), is to use a device that connects between the amp and the speaker(s). There is some loss of tone with this method, because the speaker is not getting the full power from the amp, so it sounds different. Tube wear is often made worse than expected, because they are being driven hard to get the distortion. A less common method, only used in recording studios, is to drive a speaker mounted in a soundproof box with a microphone in it. This can produce better tone, but you lose the acoustic interaction between the guitar and the speaker. Techniques like controlled feedback just can't work.

To attenuate the signal level inside the power amp, the most commen technique is something called Power Scaling. This is done by reducing the voltage applied to the power tubes, which reduces the power they produce for a given input signal level. You can get some idea of how this works by playing your guitar immediately after the power switch is turned off while the standby switch is still turned on. As the available voltage drops, the sound gets more and more distorted, and less and less loud. A big advantage of this technique is that the reduced voltage is much easier on the power tubes, and will actually allow them to last much longer. On the downside, you still have the tone loss resulting from the speakers getting a lower signal level, and the lower volume makes controlled feedback harder to get.[/font]