If you "Y" the signal into your tape deck you will get a dual mono, not a stereo signal. This could result in phasing problems in the recorded signal playback. A stereo signal would require a stereo microphone with discrete left and right outputs. The acceptable output peak level depends on what you are trying to achieve. If you want a saturated signal, then you would want to drive the Blue tube, but you would not want to overdrive your recording media. You could get this result by driving the input of the pre-amp and reducing the output signal. I hope this answers your questions. The optimum level is really subjective. Let your own tastes be your guide. As long as the signal that is being sent to your recorder is at a level that your recorder can handle and you are getting the sound you are after, then you'll be fine.