Dolby NR encoding - did it ever work

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).

The issue with dolby when used for live dead recordings is that all Sony D 5's engaged a brick wall multiplex filter when dolby was engaged. This cut off all frequencies above 14,000 hz. It wasn't a problem with dolby but rather a problem with the D5, which was the deck used for 95% of all in field use for Dead recordings.

I too was a Deadhead taper from years back, circa 1982-1995.

"11-09-15: Raymonda
... all Sony D 5's engaged a brick wall multiplex filter when dolby was engaged. This cut off all frequencies above 14,000 hz."

No, this is mistaken. First, it wasn't a brickwall filter at all. What the Sony had was the same multiplex filter used by other cassette decks of the era, although some did allow the filter to be switched in/out independently. The filters were designed to gently roll off any of the FM stereo pilot tone (which is at 19 kHz) that might be passed on from an FM tuner. Absent a filter, the tone could "fool" the Dolby circuitry into thinking the signal had HF content, thereby compromising the Dolby circuit's effectiveness at reducing HF noise. These Dolby circuits were on chips that included the multiplex filter.

It was possible to make excellent recordings using a Sony TC-D5 or TC-D5M. If Deadheads had trouble doing that, it had nothing to do the the Sony's multiplex filter.