System that sounds so real it is easy to mistaken it is not live

When you say “improve on live sound”, what does that mean?

I can't speak for anyone else, but IME if the stars align with the right recording and system setup, you're not dealing with a noisy audience! Plus the mics are placed optimally whereas at a live performance you deal with whatever location you got.

So that takes us down a different road of inquiry. A never ending contentious one. We can all agree that sometimes the live experience is not so great, because of room acoustics, ambient noise, noisy audience, bad amplification, etc but live instruments don’t lose their dynamics, even then. I was more responding to Mijostyn’s post advocating digital intervention, to artificially flatten the frequency response in the listening room, and enormous woofers (the way I think of the dynamics of live music has little to do with thunderous bass). I do agree with him that crossovers are often the enemy of verisimilitude.

Not yet. If you don’t go out and listen to live music for a while you can fool yourself into believing your system comes close until you go see a show. Then it’s back to reality unfortunately. Personally I am not sure if I would want that in my home as I find most concerts leave me with strained hearing.

The types of sounds playing through the stereo are usually a dead give away that it's the stereo. I don't have anybody in my house that's a great musician, or who can make a sound in my house sound like it was recorded in another acoustic space. Those recordings that have more pedestrian sounds like people simply talking, and were recorded in a space with a similar acoustic to my own, those have scared me a few times. One time I remember was when the system was on but I didn't know it, and a voice suddenly came over the speakers out of the blue. It gave me quite a shock. Another case was on headphones, of all things. I was listening to outtakes between tracks and in the recording some guy was laughing in the back ground. It sounded just like my friend's cackle and I got the impression he was somehow in the house when I thought I was alone in my house in Oregon and he was supposed to be in Florida with his girlfriend! 

Dispersion characteristics of real instruments tend to be very different than speakers, and that can be a giveaway. I read that Dunlavy tested his speakers in an anechoic chamber - on axis. He could get the speaker to fool someone in that situation so they couldn't tell if it was the real instrument playing in the anechoic space, or the speaker. Once you have a live acoustic space of moderate size it can be harder to fool someone in a blind test.  A drum kit played in a living room will create an intensity and impactful force of sound that I don't think any stereo speaker set can reproduce in that same space - and that's probably a good thing.  Possibly an array of speakers ready made just for the purpose could do it.