1) While stay out of the red is good, I prefer the “0dB Rulez”-rule myself. Every electronic circuit in the signal chain is optimised to work best at 0dB. And this is really the average level. So keeping the 0dB light pretty much on permanently and the 2-4 flashing only at the loudest bits on your mixer, should be just fine. It’s probably where I’d keep it at.
2) As I said 0dB is good. It’s not low. It’s normal and the setting at which the entire chain works with maximum efficiency and minimum distortion, audio artifacts and such. This is average level as far as I am concerned. So see answer to your first question.
By following these simple “rulez”, you do create that full fader on the channels plays the tracks equally loud, which is good. And yes, the only thing you use the master for is to set the level of the PA/Room speakers.
Frequency has nothing (or very little) to do with dBs. If you are “all green” on the mixer with the occassional 1-2 orange leds coming on, this is showing peaks in volume, not higher frequencies.
Hope that helps some.
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