Dolby NR encoding - did it ever work

Yes, Dolby B and Dolby C both work. (Dolby A was a professional system.) They require careful level matching however, and that meant that many consumer rec0orders were often out of Dolby alignment. Better recorders such as Nakamichi offered built-in matching alignment tools.

There was plenty of commercial compact cassettes recorded with Dolby B (Dolby symbol on the label). Dolby C was much more effective but less common.

Jon said it exactly right. ( I was a taper Deadhead too, and came to the same conclusion.) You just had to live with some hiss.

When you played back a live concert recorded with Dolby, you would often play it back without the decoding. The highs were then too bright, but it was usually better than the alternative, a dead recording. (sorry about that.) In those days, we had tone controls...

+1 Cleeds. Exactly correct. The deck has to be correctly biased for the specific tape, the user has to have the correct equalization selected for the tape formula and the record head has to be correctly aligned or it won't work properly. I have cassettes I recorded in the early 80s that blow away anything digital to this day. Took a lot of work and $$$ to make it happen, but the results spoke for themselves.

The biggest difference on my Aiwa deck made Dolby HX-Pro, an
invention introduced in 80s, that extends high frequency range of
the tape by providing servo on the bias (reducing self biasing of the
tape).