Gary, please correct me where I've got things crooked. This is my understanding of the matter.
Frank my friend, one of the biggest reasons for having large speakers is precisely to avoid distortion. Thermal distortion being the major in this case. Every driver has its physical limits in this regard when it is run agreed? They have limits in excursion and coil saturation. Even a planar which technically has no coils will at some point have the clamped edges send reflections back into their membrane at levels that will distort the sound.
Playing loud IS moving a lot of air. What we are talking about is what you are talking about, doing it cleanly. Every doubling of drivers will raise the output potential by 3dB per side and cut the potential for thermal distortion in half. No surprise then that dynamic speakers that get closest to live are typically line sources or D'Appolitos with large bass units. Then there are horns, whose moths and cavities serve to amplify and direct the energy is specific ways. I hope the horn folks like Tom Danley and Tony Ky Ma can help explain this further.
To get what Davey is after, we have to imagine this big bloom and dynamics in 3 dimensions not in a sum of directions going one way like a ray tracer. I'm talking about compression and rarefaction in every airspace at any specific time after launch as well as any resonances with anything we are in direct contact with. So, the manner in which an impulse is launched, it's directivity and propagation pattern is only a part of the equation albeit a large one. This is the one way direction. The 3D way of looking at things includes reverberation and contact resonance. Let's compare and contrast.
What a large enclosed space brings to the table are no early reflection, long reverberation times and distance from the sound source. The early reflections can be dealt with in a small space, you are limited to the long reverberations in the recording, and there is no way to create more distance from the speakers than your room allows. In a small space to best reproduce the long reverberations in the recording you have to shorten the reverberation time of your own space so it won't ring and eventually stack up unevenly as nodes which will overpower and practically render what's on the recording unrecognizable.
To get the "sense" of live, at least in the way I think I Davey is referring to, localization (like Tim pointed out) is actually not so much the issue. Pinpoint imaging as we have come to call it, is pretty much an aid we use to make up for the lack of visual cues we have on hand at a live setting. Tom Mallin wrote an excellent article right here on WBF dealing with the subject. Like what a lot of people say, it isn't natural and in most cases they are right but like Tom said, depending on what your priorities are, surreal can be better than real.
The "sense of live", on the other hand, is a physical sense of envelopment on the entire body achievable only by being able to feel the sound pressure without even having to think about it. It is felt greatest with the parts of the body exposed directly to the wave front transient, but the reverberating moving air is felt on every part of exposed or lightly covered skin or through any surface we are in physical contact with like our clothes, the floor or our chairs. Think direct plus reflected sound felt and not heard. A zero distortion top end does not guarantee the feeling just by saying that you can crank it up higher because the system is not distorting. You've still got to expend the energy and convert it multiple ways. Who was it that said that perception is our only link with reality but perceptions are not reality? God Bless him whoever he is.
Let's relate this to trends. Multiple subwoofers, room acoustics, every conceivable polar pattern from highly directional to omnipolar. The assertion of many, including myself, that all things being equal, multiple channels will get you much closer to the "feeling", orders of magnitude closer. Why? I submit that it is because of more even sensory input of sound pressure on the body from every direction.
Finally to illustrate this, let's talk Binaural. Binaural is probably the best we have as far as being able to record a live event and play it back with the most ambient cue information preserved of course listened through head phones. Yet, it doesn't feel live does it. To me at least it is just as surreal because it feels like everything is happening from the neck up. It's a dissociative feeling, it's immersive but you can't help but feel detached from reality rather than being in it. In another forum I actually joked that my friend try and sit on a subwoofer. I told him to lock the door lest he look utterly bonkers. I was just partially joking. I knew it would help him get grounded. How did I know? Don't ask.