Somehow I find it fitting that I stopped composing in the middle of the section on managing stage sources, as this topic has no easy answers.
A few points basic points need to be made before talking about managing the stage. First, some sources are inherently loud: rock drumming, even with a drummer with touch, is loud; guitar amplifiers without master volume controls, or that rely on power tube saturation and/or cone breakup are loud; brass instruments are loud; a grand piano is loud.
Second, much of the appeal of loud sounds to the musicians is tactile as much as it is acoustic. If the musicians are used to tactile feedback from their instruments and/or monitors, missing this element can be a very strong barrier to quieting the stage. Some additional subwoofer support on stage for musicians on in ears can be very helpful in this regard.
Third, as human hearing is non-linear (discussed above) sources often tend to "come alive" at a certain volume. It can be very difficult to explain to the musician that simply because an amplifier is quiet on stage, it can still "come alive" when played back through the reinforcement system with sufficient volume.
----
When it comes to volume on stage, the most basic principle is that the loudest source at the microphone wins, period. Since human voice is generally much less potent than a loud guitar amplifier, we have to make up the necessary gain by fighting the inverse square law. In other words, by placing the microphone very close to the source the local acoustic volume picked up is high, ideally higher than the other stage sources, which may have more ultimate volume, but are father away.
The classic layout of a rock band on stage makes very little sense from an acoustic standpoint, though the aesthetic appeal is undeniable. Placing drums directly behind the lead vocal source places one of the loudest stage sources in the direct path of one of the quietest.
On admittedly limited occasions I have been able to change the stage layout for rooms (churches in this case) I was working in. In these cases I always endeavored to get the drummer and/or amplifiers as from the human vocalists as possible. Practically that means placing the drummer stage left or right, then the bass player, then other other instruments, and on the opposite side of the stage the singers. Not only does this clean up the sources nicely, it also tend to lower monitor volumes, because the vocalists can hear themeselves more clearly when they no long have to face the full assault of the drume.
Realistically, 90% of the time, most people will have no flexibility in the placement of the musicians on stage, so my example is, sadly, largely academic. It is very effective should you have that luxury.
The next level of flexibility is in the choice and/or placement amplifiers, stage monitors, and the like. If you are fortunate enough to influencing a musical act that is still getting their gear together, try to stress to them advantages of smaller combo amplifiers. Smaller amplifiers not only help out acoustically, they are much more practical to setup and transport for the working band. For bass players a Sansamp or an Avalon makes an excellent alternative to an amplifier. For guitar players the Line6 X3 POD is the first model they have released that is close enough to the real thing to make me seriously consider suggesting it to musicians. While I used to be of the school of using two microphones on guitar amplifiers, these days I would much rather have a single microphone on two separate amplifiers to give the most flexibility and density in tone.
----
Now assuming that the above section on gear selection is also academic, what is one left with to deal with stage volume? First and foremost, amplifier placement. If the amplifiers can be isolated and placed off-stage, with musicians hearing them through IEMs, this is a very effective solution. Variants of this include turning the amplifiers around backwards, placing them behind a cyc/banner, behind the drum riser, draping case lids or packing blankets over them, etc. General isolation and absorption.
If the amplifiers need to remain on stage, their placement is still critical. Guitar amplifiers are highly directional, so the main axis of the cabinet should be as close to on axis with the guitarists' ears as possible. Also the inverse square law is still your friend, so having the amplifiers as close to the player as possible is also advantageous. Many times having a guitar player hear how bright their amplifier is when listened to on-axis will cause them to modify the tone, giving you something more usuable at FOH.
Along the lines of directionality, its important to realize that all instruments are directional to some extent, and just like speakers that directionality generally get stronger with increasing frequency.
Practically speaking, if mid/high and high energy can be confined to the stage, the low and low/mid energy has potential to be successfully integrated into the FOH mix. As an example, a SVT 8x10 bass cabinet is largely omnidirectional up to several hundred Hz. If this bass cabinet is reasonably near the center of the stage, the majority of the room will receive sound from this amplifier in an acceptably uniform manner. Now above several hundred Hz the amplifier will begin to be directional, so the mid/upper mid energy of the cabinet on the stage can be supplemented successfully in the room via the PA. So, if the bass amp is there, and the player is adverse to reducing the volume, this sort of high-passed supplemental FOH signal is useful to balance out the bass' total tonality throughout the venue.
In general this sort of supplement mixing works best for balancing low/low mid energy in the venue only, as these are the frequencies with little directionality from most instruments.
Beyond the above concepts, I have no magic bullets for everyone out there. Discussions with your players about the logistics of large amplifiers, and the realities of transporting them, as well as their detrimental effects on the house mix is the best hope for the primary solution of reducing stage volumes. If your players can understand that large amplifiers stacks on stage are often merely for show/endorsement deals, and are potentially unloaded and/or not plugged in.
As a final thought to traditional rock bands out there, practicing in a small space: I strongly suspect you cannot hear yourselves well, and that is likely because of your drummer. Rather than get a volume war started, while killing your hearing, how about addressing the source. Have your drummer practice with soft sticks and/or brushes, or even with an electronic kit. This will help everyone's ears, and ultimately protect the sense most vital to the musician.