Looking for new speakers

theo714:
My opinion is that you need to be more thoughtful about what is happening in your system before putting the blame on your Thiel's. One thing is true: the Thiel are very revealing and they will voice whatever is coming to them. Let me share a recent experience I had that may be helpful.
I have had a pair of Thiel CS3.6's since about 2000, driving them until a few weeks ago with Manley Labs Ref 250 mono blocks, ARC Ref2 MKII pre, ARC PH3SE Phono stage, ARC CD3, VPI HW-19 Mk4, Linn LP12, Benz Ruby 2, Van Der Hul One, and Transparent Ref cables. I was happy for a long time with my collection of what I thought were quality CDs and LPs. A month ago, my system changed to Pass Labs X260.8's (new, not broken in), ARC Ref 5SE (used), ARC Ref 2SE (used), Ruby LPS, Lyra Atlas, and Cardas Clear Rev.1 cables (new). The Thiel's stayed. For the first several days, I did not like it. There was all kinds of distortion, dullness, very disappointing. After 3 weeks of playing, everything changed, but actually two things happened. On one hand, many of my recordings sounded wonderful, hugely better than before. On the other hand and to my disappointment, I discovered that some of my "audiophile" recordings are not as good as I thought. My new system is revealing the truth.

In your case, I would suggest that you investigate the issue more methodically. For instance, play a recording that you are satisfied with, and from your collection, play another recording with similar content that shows distortion. Can you isolate the problem to the type of music of frequency band, i.e., vocals, instrument highs, midrange, bass etc.?
It may be that your Thiel's need to be serviced, but something else may be the problem. I would not assume that your new components are fine. Are all your components broken in?
Finally, I don't believe the idea that when the 3.6's were designed the electronics were inferior and so the 3.6's are inferior.

Lucky for me, I have finally located a pair of Thiel CS3.7's that I will be receiving this coming week, and my 3.6's will need a new home.

Diana Krall... almost unlistenable.

Isn't that always the case...?

I don't know if this is relevant, but...

Decades ago I owned 3.6's for a while.  Driving them with Muse 175 monoblocks.  There was one passage on one CD of piano music (Martinu) that excited some kind of ugly resonance/distortion in one of the Thiel's tweeters.  It was a metallic kind of sound.  I was never able to determine definitively if it was a fault in the amp or the speaker or the interaction between the two.  But in the long run I found the 3.6's fatiguing, so they left the building.

Finding a recording that consistently excites the problem is the first step, followed by listening to the system on headphones.  Can you say which of the drivers you hear the problem in?  I imagine you can still get tweeters etc. for the Thiels (Thiel owners thread); a lot cheaper to install those yourself than shipping the speakers.

The distortion I'm talking about is not egregious -- it doesn't immediately jump out at you, the way it might it there were serious issues with a driver or something -- in fact, close listening (with ear up to speaker) reveals that there are no drivers that are standing out as worse than others. It took me months of listening to realize that this was happening (it shows up most clearly in the Diana Krall record). In the beginning, of course, all I could hear was how much better it sounded than my old system. But over time, the sound difference from the previous system fades from memory, and you start hearing the flaws ... this seems to be the process! And one of the flaws I'm hearing is that there's just a STRAIN ... that might be a better word than distortion, though at root that's what it is .. especially in the instrumentals behind the lead voice, or the lead instrument (anywhere there's a large amount of sound coming through, as opposed to a single voice). Once you hear it, you can't unhear it!

I think maybe I should have just said I'm looking into the possibility of new speakers, and not mentioned distortion!

I appreciate all the comments and suggestions, and I will definitely check into some of the speakers mentioned.