Compressed recordings? HiFi enemy 1?

Some people say the source is the most important. But this is really the record or CD disc not the player.
Also, I have heard it said that lack of dynamic range is a major problem why Hi-Fi will never sound real. But then almost every recording is compressed which reduces dynamics.
I don't know why this is done but instead of all these exotic DAC's and upsamplers why not a player that will uncompress the music back to how it was originally recorded?

Wouldn't this improve the sound more?