I generally used channel 1 with the gain around half and channel 2 in clean mode with the gain cranked. Gave me a ZZTop kind of vibe. The amp sounds better with the effects loop bypassed via the switch on the back. It opens up the top end so the treble doesn't sound as rolled off.
Lone Stars are great sounding amps but the EQ has a steep learning curve. The treble knob is the most important and will set the tone of the entire channel. Sometimes a slight shift in treble will revoice the amp in a positive or negative way, its best to use small movements when tinkering around. The midrange will act sort of like a tube screamer and 9:00 is generally kind of neutral. The bass is designed to make a Strat sound fat, so guitars like Les Pauls will typically need to run the bass low (don't be surprised if the bass is run below 9:00 on the lead channel).