I know the EAR well. I don’t know what line stage you are using, but I tend to disagree with what you were told. I find it hard to believe that you would not have more than enough gain with the Dyna’s .3 db output into the EAR’s MC input. The EAR has a lot of gain in MC mode. 70db of gain in MC mode as I recall. That’s a lot of gain and would explain why you get distortion using a high output MC into its MC input.
However, and this is a BIG “however”. If what you are thinking of doing is going from a LO Dyna 20HX to a HO Dyna 20HX you may, at best, end up with a sideways move sound quality wise. While it is true that LO output versions of the same cartridge almost always sound better than the HO versions, the EAR sounds significantly better, inherently, in MM mode as opposed to MC mode. In MC mode the cartridge signal goes through the same circuitry as in MM mode plus the addition of the transformers. Personally, I would stay with the HO Dyna until you can get a LO cart that is itself an improvement over the 20HX. Good luck.