Luca their input comes out really loud and distorted as compared to the original stereo output.
Where? How are you listening to it? That output is about 5Vpp which is bound to be louder than the codec's 1.8Vpp output. If you need to reduce the level you can do so by applying a gain before sending it to the dac~.
[osc~ 300]
|
[*~ 0.1]
|
[dac~ 3]
should give you a clean output.