The transmitter settings are so that you can match the mic and actor/singer volume to the transmitter.  Too high and you get distortion (which can exacerbate feedback problems).  Too low and you get hiss and other undesireable noises.

The closer the mic is to the sound source (mouth), the less feedback problems you'll have.  If you don't have the appropriate EQ (parametric) to take care of the feedback without wrecking the volume and tone, try taping the mics to the actor's cheeks about 1" to 2" behind the corner of the mouth.  This should give you a fair bit more gain-before feedback than when you have them in the hairline.  (This is why we use the E6 and the similar Microphone Madness mics (which are a heck of a bargain - just order them with the extra stiff ear loop).