To try and drag this kicking and screaming back to the original question...
While the original poster is probably tracking too hot, as long as he's not clipping the signal this is almost certainly NOT the cause of the "mush" and lack of detail he's talking about. Tracking at an appropriate level leaves room for later mixing with other tracks and the use of plug ins that may or may not have problems with high levels. The mush is much more likely to be something to do with mic placement and/or the acoustics of his recording space.
Now, onto my thoughts about the discussion this evolved into.
Basically it needs to be remembered that there are several different "levels" in the production process.
-You TRACK at a level that leaves sufficient headroom for later mixing and plug ins. Some say -20, some say -18, I tend to worry more about the occasional peaks which I never want higher than -8 or so with the "average" falling where it does. There's no right or wrong. None of my plug ins seem to worry about levels approaching 0dB(FS) and, especially working in Floating Point, I can just move a fader up and down if adding all the tracks together seems to get too hot.
-You MONITOR at a level that's comfortable to listen to and appropriate fotr the musical genre. Yeah, there are set down suggestions but the main thing is that you can turn your monitors up and down without affecting the actual levels in the mix. Turning up your monitors doesn't affect the actual levels any more than turning up your TV changes things at the TV station.
-You MIX so that you still have some headroom left for any processes that will be used in the mastering process.
-You MASTER to (amongst many other things) make the final levels on your project something similar to a commercial recording. Almost always this'll mean peaks right at the 0dB(FS) but you can leave more or less dynamic range (i.e. the difference between the loudest and quietest parts of the mix) down to your taste. Too little dynamic range can make your music sound flat and just generalised noise. Too much and the quiet bits will sometimes get lost in today's noisy listening environments.
Somebody mentioned making CDs of a work in progress and normalising to get levels up to something listenable in a car or whatever. Indeed, this is exactly what I do when I want to listen to something to check the mix before doing the whole mastering routine.
No, you don't want to clip. Yes, you want your mixes loud enough to hear in a car or on earbuds on the train--but, between these points, there's a lot of wiggle room and no big rights or wrongs.
