I don't know of such a project, but it may have been implemented several times already.
How do you want to implement the volume control?
One method is polling the audio input (analogRead) and output it to an DAC. Then you can track the volume level of the input, and reduce the output values accordingly.
Or you use an (external) DAC as an attenuator (digital pot), by connecting its input (reference) to the input signal, and setting the DAC value according to the desired attenuation.