How loud should the input level be on my TC unit? Should the meters be almost clipping?
You should leave some headroom (between 3 & 6 dB) on the input meter to avoid internal DSP overloads.
A DSP overload can happen anytime though, depending on how much you boost the signal inside the unit. If you boost the signal too much, the LEDs will light up, even though the input is not too loud.
You should be careful with overloading the DSP. In analog equipment, overloads can produce harmonic distortion, which can make the sound "warmer". In digital equipment overloading just degrades the sound!