Instead of a 1-10 drop down menu, impliment adjustable faders (with higher fidelity) for different groups of audio, such as:

Music
Flight Systems (HUD clicks, hits registered, incoming seeker lock, etc)
External Sounds (weapons fire, explosions)

Also reduce overall game volume by 6dB (currently it's extraordinarily loud even at the lowest setting).

+1 to more volume controls.

I do like the idea of sliders rather than drop-downs, but I don't know if the GUI library the devs use provides a slider widget. If not, they'd have to develop their own widget (maybe it could piggyback off the scroll-bar code; depends how IUP handles custom widgets) which would be a lot more work than just swapping the dropdown box for a pre-existing slider. On the plus side, once they had it built and working, they could use it in other places as well, not just the volume controls.

Regarding your assertion that the overall game volume is loud, I don't find that to be the case at all, but I only play on Linux. Perhaps it varies by platform or something. Anyway, a better solution is to just permit reducing the volume even further for people in your situation, without removing the higher options for those who want/need them.

I play with desktop volume at 70% and game volume at 40-60% depending on other sound outputs. It's a good thing to have an upper limit that you don't have to use.

Ok well clearly the superloud volume issue doesn't effect everyone.