OK, did some more testing. Its certainly a grounding issue with the POD. If I'm plugged into the wall with the provided power transformer, then play using the headphones directly though the unit without an amp connected, it hums like a church choir. But when I play normally through the amp, all is well. I then had the unit sitting on top of my amp after I had shut the amp power off but still had the cable connecting pod to amp plugged in. Issue found! When monitoring through the headphones, the cable connecting the amp to pod was now allowing the signal to go to ground by going through the amp system and into the house power outlet - as it should. I could touch the guitar cable into any of the pod's 1/4" jacks on the back and hear the buzz disappear when i did. So technically nothing is wrong with the unit internally.
... but things could be better.
Suggestion for Line 6: Improve the POD power supply adapter. Sometimes late at night its nice to use headphones to practice and not wake the neighbors. All that is needed to solve the humm/ground problem when using the POD as a stand alone unit is for line 6 to change the power supply transformer cord into one that has the three prong type plug so that the unit can get a true ground through the power outlet.
Hasn't anyone had this issue before? seems odd no one else has mentioned this. Maybe something is wrong with my unit after all.
For now I'm going to get a negative tip 9V-3A power adapter off ebay that has the ground circuit. That should fix the hum when going ampless with cans.