Weseixas, " ... has a Holodeck" -- nicely put :-)
Timlub, unfortunately the key phrase in your comment is "distortion is so far below our hearing that it was unconceivable to hear" -- of course distortion is easy to hear! My system distorts, your system distorts, everyone's system distorts. That is why every system sounds different from every other system, every time you change something in a system it sounds different, because you have changed the distortion component. If you have two widely differing systems that don't distort then they must sound identical.
I think the problem area is in the use of this word "distortion". One dictionary says "a change in the wave form of the original signal", which sounds fair enough to me. The argument would then be how MUCH change is allowed before you would call it distortion; I would say only so much that you can hear a difference between the original signal and the distorted one: if you can hear a difference between the original and the altered signal then you can hear the distortion! Two systems sound different, which is the distorting one? Both, of course, as compared to the original waveform.
Another way of looking at it, is that there are 2 tiers of distortion, let's call it "macro" distortion and "micro" distortion -- sounds familiar ... :-). Everyone knows macro distortion: boomboxes overloading, speaker cone rattling, treble ripping layers of skin off your eardrum, you could even include really bad digital playback here; all very easy to pick.
Micro distortion unfortunately is everywhere, it's all that low level stuff that makes one system sound different from the next. But everyone normally calls it the million and one other things, see J. Gordon Holt's Audio Glossary. Interestingly he includes "distortion" in its own right, firstly as a "true" definition: "1) Any unintentional or undesirable change in an audio signal." and then to highlight most people's concept of "macro" distortion: "2) An overlay of spurious roughness, fuzziness, harshness, or stridency in reproduced sound." But in the majority of the other, sound related terms in his glossary he specifies virtually every other type of "micro" distortion: dry, forward, haze, liquid, etc, etc. Talking of THD and IMD, these are just straightforward ways of putting numbers to the distortion in a very specific setup, somewhere between maximum "macro" and minimal "micro" ...
So, what to do? My "solution" is to eliminate, obviously, "macro" distortion, and then as much of the unpleasant, AUDIBLE "micro" distortion as I possibly can, which is, very, very difficult. How do I know I've got there? When I can change something on the system and from the point of the auditory experience nothing changes! And, at this point the sound becomes "real" ...
Frank