The feed sounds good to me as well........Zero background hum.....even at full volume.
I think the wishy-washy sound you hear during a pause in the transmission, is just the software making it's best-effort at encoding the low-level hiss you would normally hear directly from the radio speaker.
You MIGHT be able to improve it by playing with the bit rate and sample rate, but personally, I'd leave it alone...I do know that a 8K bit rate, and 8K sample rate sounds horrible, compared to the 16/22 combination you are currently using. Increasing these settings will use more of your bandwidth and processor load on the computer.......the trade off isn't worth it. Keep in mind that by keeping your bit rate low, it conserves everyone's bandwidth. While this may seem minor, it could make the difference between a dialup user being able to listen to your stream, or being left out.
As far as your Line Input jacks go.........look for a mute box or button on the mixer, and make sure it's properly set/unset.......Unless you have a specific reason for using the Line-Input jack instead of the Mic jack, I would leave it alone.......The scanner I have simply doesn't have enough drive to utilize the Line-Input jacks on my computer. This only becomes an issue if you want to add a 2nd radio to the same feed and provide a left / right stereo feed.
Good Luck !