Is soundstage just a distortion?

Soundstage is determined by recording technique. For purist recordings the microphone setup is the determinate. For studio recordings soundstage info is created via electronic processors.

On the reproduction side it is not clear to me that audiophiles are interested in an accurate soundstage reproduction. Wider or deeper seems to be desired whether or not it is warranted. Dipoles, wide dispersion or rear firing tweeters and omnis all overlay additional soundstage info to what is already in the recording.

If your system can provide a reasonable facsimile of the real soundstage info present in a purist recording, it means your system a lot of other things really well.

If one cartridge can produce an other worldly soundstage compared to another, then obviuosly a cartridge can rearrange the soundstage. It is also not clear what conclusions can be drawn about analog versus digital.

What exactly do people mean when they say a better soundstage?

Commenting on Learsfool's most recent post -- multi-miking classical recordings is not necessitated by the use of digital recording devices. There are no technical reasons why a 2 or 3 track, a la 1950s Decca/Mercury/RCA, digital recording cannot be made. The reasons for miking each orchestra section and/or soloist are artistic, practical and ultimately economic. Multi-miked, multi-channel digital recordings give the audio engineer/conductor/record producer/record label far greater control and make it easier to sculpt the final sound of a recording than purist recording techniques can. Effectively, classical recordings have adopted the pop music paradigm of record production which doesn't place an emphasis on "realism". It's not about the capture of an event, instead it's more about the creation of one.

Mezmo, microphones do not "hear" the way human ears hear. There are dummy head microphone systems that attempt to replicate the human head/ears, but recordings made with them typically do not sound right when played back over loudspeakers.

Here's a primer on stereo mic recording techniques.

Traditional microphone techniques, both mono and stereo, do not encode significant height info.

Interesting article by John Atkinson.