Well, this is the simple fact:
Analog clipping introduces harmonics and intermod, a great deal of analog clipping is well over 20khz, and just fails to go through the equipment.
If you clip a DIGITAL signal, you create harmonics, they ALIAS, and all wind up back in the band you can hear. Furthermore, they are generally anharmonic, i.e. they sound (bleepity bleep) awful.
Let me see if I have an image handy.
Frik. No, I don't. It's in one of my tutorials. I kind of wish I knew which.
Ok,
http://s238.photobucket.com/user/jj_0001/media/plots/clip2.jpg.html shows this.
The first line is a sampled (i.e. no reconstruction filter, so you still see the sample intervals) sine wave near fs/2.
The second line is its spectrum. Note, 1 line below fs/2, no muss, no fuss.
The third line is the same signal, but clipped to .5 (where the second was max 1). This is digital clipping, remember?
The last line shows the spectrum of the third line. Look at all that crap.
And it's not a mistake. Every one of the harmonics that was created by the clipping aliases back down into the audible range. Every one.
The short version:
DIGITAL CLIPPING SUX.
Clear enough?