My experience is that you will achieve far greater immersion in the music with "middle class" speakers and top electronics than vice versa. This tells me that it is electronics that are more limiting of realism than speakers. The distortions speakers make are still, more or less, in the realm of sounds we know from nature and that is because resonances of materials, cabinet vibrations etc. are physical materials vibrating...we know this from evolution. Electronic distortions are wholly unnatural and never before experienced by humans until about 90 years ago. This makes them jump out as unnatural and this destroys immersion and suspension of disbelief. It is for the same reason that the room is less important because reflections in a room have been known for 10s of thousands of years, since man started living inside a cave. Our brains know what to expect from room reflections and can tune a lot of this out...unless it is too intense and then you hear this clearly as a drop in intelligibility when speaking in the room. If the room has no issues with speech then it will work ok for hifi.
Obviously, if you have the cash then optimization of both is a good option.
I think your words may be confusing depending on what you believe. Do you think tube electronics are better for immersion? How about old tube electronics? If you agree with Dave, then you PREFER distortion. In fact most stereo's that are very low in distortion are typically found as less engaging, sterile, etc. That's not always the case, but it has been the trend since the 70's. Furthermore it's well known people can endure lots of distortion from electronics and not even know it. So I'd say this is a completely false approach to explain the situation. The situation is very real, but it's not about distortion - well at least not voltage distortion.
Now, if your argument was noise in the electronics plays a big factor it could be part of the equation.
I'm not saying you're wrong to say that electronics are the most unnatural part, I'm just letting you know 'distortion' is the wrong term for describing it. It's very clear, because once you start designing electronics and try to please someone such as yourself, you would have to guess and check since distortion could be vanishing low and you'd still reject it. (vanishing low distortion is pretty normal these days, if that's what the goal is)
I can't speak for him, but I think it has to do with tonal balance, resolution and distortion. We have discussed the topic of goals with each other and agree that we are each after "accuracy" in the sense that we are trying to get a sound which reminds each of us of what we hear at live un amplified music events, ie, the BSO. However, the last time we heard each other's system, he called mine dark sounding, and I thought his system was bright. This was a while ago, and we have not visited each other for a while. Our two systems have also changed a bit since then, so these impressions might be different now. You can search my system page for more information.
The problem here is you're describing accuracy of real life. You're 100% in camp 1 if that's your goal. It also means you have 0 intention of having an accurate system because a system can only be accurate to the source material; and the source material is accurate to the studio & engineers choices, not the instrument/singer. You prefer manipulation to meet a live representation. This is what spawned the whole thread really, and what I've said is probably the biggest issue. You must admit accuracy, distortion, etc, is not your goal in order for the clarification Ron has brought to the table, to work. (this is ironic because you have a fairly low distortion stereo, but whatever, it's about goals)
The only person that I think really is working at goal 3, off the top of my had, is passpig because he has 0 intention of making it sound like real live music, or accurate to the source material. We say we "land" there, but that's as an admittance that we can't make our system perfect. I think it's more appropriate to classify our goal, not our achievements. After all we have little to discuss if there's no goals being approached when we inquire questions on the forum.