If you perceive the peaks as less loud because that is how people hear, that would seem to infer that the dynamic range is affected, at least as perceived, since the peaks do not seem as loud anymore, just as those nasty loudness cues due to negative feedback that you are focused on make you perceive things as louder as you describe.
Mapman, that is true but is not the same as real dynamic range. I don't think it is a good idea to promote a practice of intentionally distorting the loudness cues in order to make something sound louder than it really is. A lot of amps do that though, and is why they sound loud and shouty, as in: "Turn that !@#$%^ down!!"
IOW, if your system has the ability to sound loud, the loudness cues are being distorted. It is possible to build a stereo that does not seem to play loudly, so that even 105 or 110 db is comfortable. I'm a fan of being able to play the system to life-like levels, that is not possible if it also messes with the loudness cues!
IMO/IME in about 90% of the conversations that audiophiles have about dynamics, the word 'distortion' can safely be substituted without changing the meaning of the conversation. It is the reason I avoid using 'dynamics' except in for this context.