Absorption, Diffusion or a combination of it all?

Having a good mix of absorption and diffusion is certainly essential. Also consider DSP based room correction technologies which operate in the time domain. Dirac Live helps listeners correct for one of the weakest components in the audio chain, the listening room. Dirac Live not only corrects the frequency response, but also the impulse response of the loudspeakers in a room, yielding improved imaging and timbre, better clarity, tighter bass, and less early reflections, as well as reduced resonances and room modes.

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If most listening is below, say 85 db, are room treatments still as important?

85 decibels is a sound level equivalent to that of a food blender. Uncomfortable and only tolerable for a short time. Most listening levels might not even be that loud.

Having said that, peaks can still get fairly high above the general listening level, so treatment is still wise.

Maybe not as important, but crucial.

Taking time to research. I’m using the panels that I already have to experiment. I’ll play with REW soon. We’ll see what it does. 

@kota1 -- thanks for the video--i only watched starting at :49 but it seemed to me the discussion was more pertinent to home theater setup (which you have) rather than 2 channel setup (or 2.1).  Can't help but wonder if his "formula" is based on having center and side/back surround speakers in the mix and thus maybe overdone?

As for diffusion v absorption behind speakers as w anything it depends--in my room i have a large window behind my speakers and, therefore, opted for absorption (of high/mids) behind the speakers with a curtain rod and heavy drape and it worked well.  When i slide the drape out of the way and play with the the wood venetian blinds of the window (as a diffuser of sorts?) it produces an interesting effect that is not displeasing but seems to de-focus the soundstage.  

Someone above said smaller rooms have different challenges than those addressed in the video and are more challenging. I fall into the wolf garcia crowd of just doing a few things (bass trapping), first reflection and aforementioned absorption and then just enjoy the music (although admittedly i measured frequency response in every part of my room first, mainly for speaker placement and knowing where the bass was emphasized--which, surprise, the usual corners)--i only spent three or four hours total and I'm happy.  As someone else said above, unless your room is really problematic don't obsess over treatment tweaking.