Speaker Imaging - Do you hear a line, or do you hear an arc??

However; & this is the interesting bit... if I adjust time delay of one channel by varying degrees (DSP), say only 0.2ms (a tiny amount!) then the soundstage changes quite dramatically.

poppycock. Time delay will shift the image to one side. 

yes, but the listener does not move so all the room reflections are also time displaced. If one moves their seat, reflection times change as well.

IMO, this helps account for the popularity of the egregiously awful compact cassette among retrophiles. A head misalignment of 0.375 thou. introduces a channel time delay of 0.2ms

The best recordings have instruments pinpointed in three dimensions. 

OOPS,  Just saw the last sentence:  B&W 803's with 10" subs underneath, time aligned placement, slightly sunken room open to main room, with identical amps driving all four speakers with separate, identical preamps on, shall we choose, Rosie O'Grady's Direct to Disc (Aphex enhanced of all weird things), "Good Times Jazz Band", a late 1970's recording by the large house band at Rosie O'Grady's Good Time Emporium in Orlando.  This recording has everything from a triangle intro on "Japanese Sandman" to a romping tuba extended solo on "When You're Smiling". (All Audire electronics including head amp, 125/250/400 (8,4,2 ohms) wpc x 4, with an often used Hafler amp and preamp, for comparison.)