Does balanced interconnect sound beter than RCA?

Aside from the interesting technical analysis given above, to my ears there are consistent sonic differences between the two that are neither good nor bad, just different flavors. I have owned SE systems and fully balanced systems. Most relevant for you would be my current setup, which is a Wadia 861 feeding into a Levinson 383 integrated amp. I have compared Cardas Neutral (or Golden) Reference XLR versus RCA interconnects between the CDP and amp (same length = 1.5M). The Wadia and ML both operate fully balanced. So... IMHO:

Generally the XLR offers more 3-dimensionality and "air" around the instruments, especially with more complex recordings. e.g., with symphonies XLR seems to sort out the soundstage better. But on smaller scale music such as a single guitar, the RCA seems to provide better focus and a more realistic size, whereas the XLR can sound a bit "diffuse". Generally, the leading edge of most bass notes seems more noticeable with RCA, yet the XLR can give better tone/harmonic definition in the bass. For most rock and jazz I like the RCA presentation. For classical I like XLR. Of course, like anything in audio, I encounter exceptions, e.g., even though solo piano is a single-instrument, I prefer the XLR elaboration of its 3-D characteristics and harmonics. My preference can also depend upon the recording quality of the CD. I've found that my impressions of XLR v. RCA cable are very similar to those of Jon Scull in his review of the Accuphase DP-75V CDP (Stereophile, July 2000, see on-line review).

But these differences are less than what you will hear between different product lines of CDP's and amps. If you find a SE CDP whose sound you really like, such as Naim or Cary, don't worry about what you are "missing" by not having XLR. If you find one with XLR outputs, be sure it is truely balanced before investing in an amp with XLR inputs (and make sure the amp operates fully balanced!). One important note, as stated above, a balanced system will be preferable if you must run very long cables.

Balanced lines make a big difference in my home system. Without them it hums.

Yes they do. I own an Integra Research RDC-7 pre amp . Its is truly balanced as it was co designed by Balanced Audio Technolgies. I use Classe Equipment, again a truly balnced design to run the Home theater. Its absolutely no contest.

In a second system I own a Classe CDP-10 . It has a truly balnced output. I run it into a Classe CAP-151 integrated, a truly designed balaced input. The results are devasting IMHO.

Their is alot of confusion on this subject as many if not the majority of manuafacturers that Have XLR inputs are not truly balanced inside the machine . They share and are tied together with the single ended circutry inside.They are not truly balanced, despite having XLR inputs. You really have to dig , I mean dig, to find out which components are truly balanced.
When you do , and you take advantage, The results are outstanding.

Balanced circuits and connectors have been the standard in the recording and broadcasting industry for decades. They are noise and RF resistant, with better grounding, and the positive locking connectors are more reliable and easier to use. If you want to demonstrate the superiority of a balanced system, just try a long microphone line with single-ended circuitry and RCA type connectors. Be prepared for hum, frying sounds, and radio stations along with your music!

I HIGHLY RECOMMEND using balanced outputs instead of single-ended RCA's.
In my system, there was much less noise, the hum was eliminated, the imaging and openness was better, and there was much more gain using the XLR's instead of the RCA's.
I was very surprised at the improvements! And, my Parasound HCA 3500 power amp is not a truly balanced amplifier! It has the XLR inputs, but as far as I know they are converted to single-ended inside the amp.
Results may vary with different components and systems, however.