That makes a lot of sense why people recording to a computer would use plug ins instead of hardware.
They don't always. It depends on who's doing the mixing and what kind of gear they are working with. Most prefer the sound of a really expensive analog compressor than a digital plugin. Others prefer to keep it all in the box...maybe because of cost reasons (can't afford nice outboard gear) or because they want to avoid another D/A/D conversion.
But in this set up - mic>preamp>eq>compressor>interface - is that assuming you are using a different preamp? What if you want to use the preamp in the interface? Does it go mic>preamp on interface>line out on interface>eq>compressor>??? I guess I'm just having trouble understanding the actual cable in cable out setup.
Like I mentioned above it all depends on how your software handles it. And I don't know enough about every program out there to tell you. But, for example, something like the Digi 002; In Pro Tools LE there are effect inserts on each channel where you can insert plugins on a track. In the plugin pull down menu there is also the option to send the track signal to an external I/O. You would just assign it to a valid output (ie. channel 1 on the 002), patch a cable from the 002 to a compressor/eq, patch the output of the effect into the channel 1 input on the 002. Then Pro Tools puts the signal right back in the signal path for that track.
You just have to research to see if your software supports hardware inserts. And how it handles it.
And how would you add another preamp to an interface? And I don't mean to get an extra channel. Let's say I buy a really high quality 1 channel pre (I probably won't, but entertain me here) and I want to use it with my interface. How do you hook that up without going through the preamp on the interface? Would it just be mic>new preamp>preamp out to line in on interface?
Mic pre's output line level. So you plug it into anywhere that accepts line level (usually 1/4" TRS inputs on most interfaces). Again, it depends on the interface you're wanting to use. Many preamp inputs (most likely XLR) give you the option to also plug in line level devices and then you just hit a switch on the interface so it knows it's not a microphone. However, do note that each interfaces treats this differently. If you are wanting to bypass a mic input to use an external preamp instead...it's best to find a channel input that accepts ONLY line level (1/4"). Reason being is when you use the XLR inputs on some interfaces they don't always say "oh okay, you want to plug in a line level device instead....let me send the signal down the line level only path." Instead you get a response of "oh, line level huh? Well, I'm going to send you down the same path the microphone goes but first I'll reduce you ~25dB."
In other words, your crisp clean sound that you get out of a $2000 dedicated preamp now goes through ANOTHER preamp on the interface. The interface just reduces the volume so that you don't overload. Most people don't like this because they bought the expensive pre to AVOID the nasty stock pres on the interface (the 002 is an example of this). This is one reason you'll see a lot of engineers who prefer to purchase line level interfaces only (ie. all the Digi HD I/Os). That way the engineer can use the preamp of his choice and not worry about it hitting another amplification circuit.
