I don't post much on this forum, but I've been watching this thread develop & am a little perturbed by the tide of hostility which seems to directed at a genuine attempt to advance the state of knowledge. Of course, there's also a great deal of constructive discussion here, and that is to be applauded.
Personally, I think that Amir is doing a fine job of teasing out some of the second order effects which impact on perceived loudspeaker sound quality. Research is an iterative process where we're constantly trying to build on what we have, and question and improve the accuracy of our models based on observational data.
A lot of people here seem to be getting very upset that their dream single quality metric (spinorama) is somehow invalidated by this latest observation. This is really not the case. Ok, so the "one absolute metric" aspect might be called into doubt, but, as has been amply shown here by numerous quotations from Toole, etal, it was never intended to be the ultimate indicator of sound quality, simply a practical metric to use in the specification and evaluation of loudspeakers.
I think everyone would agree that frequency response has always been the primary quality metric for judging sound reproduction. Harman's body of research which, for the first time showed meaningful correlation between off-axis frequency response and listener preference, has been a huge step forward in this regard. Amir and colleagues are simply attempting to build on this body of knowledge to give better differentiation amongst high quality speakers which already show excellent frequency response and directional characteristics.
It seems that the term "THD", too is causing some upset. And, yes, I do (just) remember the THD wars of the 1970s! "Total Harmonic Distortion". The term makes harmonics seem bad and its use is, I feel, rather counter-productive. It's not the harmonics in themseselvs which are the problem, as musical instruments themselves generate large numbers of harmonics, often in excess of their fundamental tone; it's called "timbre!". The issue with measuring harmonics of a steady tone is simply that their presence in a test signal indicates nonlinearities in the system. The result, due to intermodulation, will be additional sum & difference products of all of the signals passing through it. And that is not good.
I think that it's important to understand what we are actually measuring when we look at "THD" figures. THD is actually a very good indicator of the linearity of a system at a given frequency. We're looking at the way in which the transfer function (input versus output) deviates from a straight line, and THD can give us an indication of the severity of this. By separating out the individual harmonics, as is routine with FFT based calculations, we can also get an idea of the type of non-linearity, be it square-law or cubic, etc. Although completely automated by using swept tones and mathematical analysis, for a given frequency the measurement consists of putting a pure (sine wave) tone into the speaker, and then taking the output (via a linear microphone), subtracting the original frequency, and measuring what is left. This residual consists of harmonics of the original signal (at 2, 3, 4.. times the frequency) plus noise, etc. Although this latter aspect is less relevant for speaker testing.
In the case of the IL10 speaker, we get a sharpish peak in our "THD" plot. This means that, at 1.7KHz other higher frequencies are present in the output. The sharp peak would suggest a resonance of some kind, and is indicative of a resonance of some sort. As has been suggested, it could be cabinet resonance, or a break-up mode in the speaker cone. In any case, the sound output due to distortion at this point is only 1.5% higher, which is about 0.13dB or so depending on how you add the signal and distortion product. Although hardly noticeable on the frequency response plot, this level of non-linearity is hardly insignificant and with a complex (music) signal can give rise to considerable unwanted distortion products due to intermodulation. Of course the actual audibility of this is subject to listening tests, and is sure to vary from listener to listener and type of music, etc. As Earl Geddes has pointed out, no direct correlation between THD/IMD figures and "sound quality" has been found, but I do think that Amir's comments of a "grungy" sound bear some consideration.
I'll just add that intermodulation distortion is generally linked to a thickening "dirty" quality to the sound, which is exactly what Amir is reporting. Ok, this is an anecdotal observation, but anyone who has listened to electronic music from the 1960s will be aware of the use of "ring modulators" and also know of this sound. Personally, I'm not sure of the attraction, as the resultant noise is quite horrid!