I think this a clear case of someone trying to listening with his eyes. It sounds far from low-fi.
The Shure SE535 beats the Sennheiser HD800 in terms of square wave tests and %THD. So based on these graphs you'd think they belong in the summit fi section if one was to listen with his eyes.
To start, the IEM measurements at InnerFidelity ALL show lower THD+N -- I think that's inherent to the testing methods used.
Secondly, I think you're attacking a strawman here. My point is that distortion in large enough quantities sounds bad -- 10% THD+N is going to sound like crap if you introduced it into the signal on ANY headphone. Distortion in a tiny quantity (as would be introduced with tube amp systems) may even color the sound such that people will enjoy it more -- I can't prove that until blind tests are done with several subjects.
The whole talking point about comparing the Shure to the Sennheiser based on measurements doesn't seem to mean much at all for this argument.