To be fair, this lower volume on European iPods was introduced 5 years ago (IIRC, with a firmware update on the v3 iPod) due to possible French legal action. So it's nothing new. Does it only affect iPods, or do other manufacturers also conform to these regulations?
One foolproof way around this limitation used to be to buy an iPod from the US (I have no idea if that's still the case, or whether firmware updates will re-implement the limit).
I have to say, I've never felt the volume limit was a problem. Experts have always warned about the dangers of hearing damage from listening at high volumes with headphones, indeed The Who's Pete Townsend has blamed his hearing problems on this.
Just a thought, have you inadvertently set a low volume limit in the iPod's settings, or is it switched to 'Off'?
Cheers,
Tony