Q: What is a good way to determine the optimum threshold?
A: Usually just watch the little compression icon on the display to determine when the compressor is kicking in then adjust it to taste. It's always a trade off using a compressor as it will increase the noise floor so setting the threshold/sensitivity is important. The main thing is to adjust it to taste.
Also bear in mind that overdrive circuits also provide some compression so you typically don't need additional compression when you're overdriving things.
Q: What is the vertical bar all about?
A: The vertical bar is an indicator of the compression that is being performed. What makes it a little weird is that it is ON when the signal is NOT being compressed and goes down as the compressor kicks in.
Though it is rather coarse, the little 8 segment compression indicator is evenly mapped across the range of the compressor so movement of the indicator means the compressor is working. If the indicator is always on, the compressor is never kicking in.
Generally you want the meter to go down when you hit it hard but not go down at all when you play lightly. I guess it kind of works the opposite of what you'd expect; as you play louder, the meter goes lower. A lot of compressors go from the bottom up as a visual clue that this is not a level meter. We probably should have done this as well.
You might want to use the gate if you're using a lot of compression as the noise will get pretty loud.
Note that the noise gate is fixed at the input to the POST section just after the Insert inputs. In the routing diagrams, this is always immediately following the "G" (the Gain block). This is important because, if the compressor is placed after the gate (just after the Gain block), the effect of the gate is reduced because the compressor pulls the noise floor up after the gate:
This shows the input feeding the Gain block followed by Effect 1, then the Delay feeding the Reverb and finally the output. Using a compressor in Effect 1 is bad as it will drag up the noise floor of the gate (everything is noisy, it's just a matter of how much you amplify it). The position of the Gate should have been configurable but was not. The path is really like this:
Gain, Send, Insert and Gate are hardwired to stay in the order shown. The Gate really should have been at the end or, even better, moveable. In some cases you don't want the Gate at the very end as it would cut off things like reverb tails or delays. A better setup looks like this:
Remember, Gain=Send=Insert=Gate are locked (and represented by a single "G" in the routing diagram). Their order cannot be changed.
With this setup you can compress the signal a bit before it goes into the Gain block then beef it up even more there. Enable the Gate and set the depth to only a few dBs just to knock the noise down a bit. The less depth you use on the Gate, the less noticable it will be as it turns on and off (a common problem with using Gates).