I think the forest (mulveling's general point that good well-matched gear counts, and the 'room' although important is not magical) was totally missed for the trees (stereo in a bedroom or tent). Gotta look beyond generalizations...
I've read Bob Harley's work since the 90s and always try to remember he is in a business that needs to survive, if not grow, to ensure his employment. However I do believe he's a music and gear lover even if we disagree on occasion.
I think any Law of Accelerating Returns relates pretty much entirely within the single domain of the audio system so well-matched as to be magical, and one where on rare occasion the sum of the whole is greater than the sum of the parts. That's great. To make his point it seems Bob assumes all systems are mis-matched to a point and one more expensive magic bullet may pull it together. I don't agree.
As I understand the Law of Diminished Returns, and assuming equally well-matched systems in different price ranges, the law will apply just like it does with bicycles, cars, watches, etc.
So, a well-assembled audio system for $10k will be great and one for $25 will be better, and $50, and $100 and so on. But, in each case the level of audible 'return' does 'diminish' for the additional dollar spent, at least to most everyone with ears and no Brinks truck in the garage...
Great discussion for sure and thanks to the O.P. for posting as I'd already read that editorial from Mr. Harley beforehand and sure had my thoughts on it. grin