...a system that distorts the distortion in recordings that include distortions (like fuzz guitar for example or certain synthesized sounds) may not sound very good. There is nothing worse and perhaps even harder to detect than distorted distortion.
Mapman I agree that the compounding of distortions can easily result in terrible sound, particularly if the distortions in question are dysphonic, like intermodulation distortion. In my post, when I said that, under some conditions, the distortion of information can be an asset, rather than a liability, I had in mind what might be considered euphonic distortions, such as certain kinds of harmonic distortion or non-flat frequency response. Perhaps a better word than distortion would be inaccuracy, since the word distortion conjures up associations of lousy sound. With that in mind, when I said that...
the flawed presentation of flawed information can be more tolerable than the accurate presentation of flawed information
...the words flawed presentation could be substituted with euphonically inaccurate presentation. And while I'm clarifying what I meant, I should mention that the words flawed information in the quote above were not intended to refer to the kinds of guitar or synthesizer effects you mentioned (which are of course deliberate distortions created by the artists) but rather things like compressed dynamic range, objectionable equalization, etched high frequencies, and so on.