According to the devs of Amarok, the new VLC based backend for Phonon delivers better sound quality than the Xine backend. Something like this just begs to be explored of course and the instructions below are based on the generic ones but specifically for Gentoo. Please note that the backend is alpha: it is incomplete and changes daily.
Install VLC 1.1 pre by installing the live version (note that VLC 1.1 is about to be released any time now so this might be available by the time you read this). Note that I had to disable the Gentoo patches in the vlc-9999 ebuild as they prevent VLC from compiling.
Note to self: add the keywords to the '/etc/portage/package.keywords' file. ;-)
Next, fetch the Phonon-VLC backend from GIT. Note that is should become 'stable' soonish (it said somewhere it should be moving to kdereview in the near future) so it should be safe to assume it sort of works.
And thats it! Just fire up Amarok -> Settings -> Configure Amarok -> Playback -> Configure Phonon (or go through System Settings in KDE) and select the VLC backend (currently shows up as version 0.2).