I am actually pretty impressed with the headphone out. I left Android exactly 2 years ago because of subpar audio quality. I wanted an all in one device that actually had good audio, so I switched from an HTC incredible to an iPhone 4. Last tuesday I decided it was time for an upgrade so I made the choice to try Android again knowing that a lot has changed in the last 2 years. I figured I'd give Android another chance. Coming from the iPhone 4 to this I am actually just as happy with the headphone out. Using my $200 Vsonic GR01 (which are TWFK dual balanced armature) in ear monitors is actually giving me great sound, just as they did with the iPhone 4. I am using the volume anywhere from the 5th notch to the 9th notch and it's plenty loud. These IEM's have what I'd say is a slightly above average sensitivity rating of 108db, and a 32ohm impedance. I usually only listen in the 75-85db range though to avoid hearing damage. I'm also not noticing any hissing or any obvious distortion. Everything sounds clear and as it should.
I do have a USB OTG cable in the mail so I can hook up my Fiio E17 headphone amp/DAC for my full sized modded Fostex T50rp headphones. These require a lot more power than what the S4 or my old iPhone 4 could provide alone. For in ear headphones, at least ones with a 16 ohm or higher impedance, with a decent sensitivity, the S4 does great.