Many possibilities could cause distortion.
some things to try (if you have'nt already)
Check all Gain settings in GarageBand, Gain settings of Mic including the H2's Auto Gain feature.
check if your H2 production date is later than 2007 as some 3Mic H2's had a problem, design changed to 4Mics
Make sure Ducking in GarageBand's Control menu was not used on other tracks inside your project.
Although your recoring may be good, the independent volume or gain for that particular track may too high. Play the audio back on the H2 (pref with headphones) and see if you hear the distortion there.
The answer will be something simple if youve got a later model of the H2