Yes, but the scenario is based on real-world experience with customer complaints about piano tones through power amps that measured at 0.1% or better. The link in my previous post says the same thing.

Totally false. Make a signal that's a mix of 40 Hz and 3 kHz, where the 3 kHz tone is -80 dB lower than the 40 Hz tone. This is equivalent to 0.01% THD (at the 75th harmonic!), and you'll be able to hear it pretty easily. You don't even need IMD. (I've tried to attach example tones to this...

It is not out of the Nyquist band. We're talking about amplitude, not frequency. No. Go learn the difference between discrete-time systems and digital systems. That would be you. Go read more about intersample peaks until you understand what they are. Has absolutely nothing to do with...

Again, this has nothing to do with Nyquist. Intersample peaks above full-scale occur for correctly-sampled, correctly-bandlimited sine waves below the Nyquist frequency. Nyquist sampling theorem is about discrete-time analog systems, has nothing to do with digital quantization, and doesn't...

Well it can't be made impossible, but very rare for realistic recordings is the goal. I guess I should analyze my entire library and see how high the peaks go for real recordings.

It doesn't matter who put the signal there or why. There is such a thing as a signal above 0 dBFS, between the samples, and it either needs to be clipped off, or reconstructed correctly.

Agreed, but it's too late to change the chip now. Analog clipping at 0 dBFS is perfectly valid, and better than becoming unstable, but reconstructing the wave above 0 dBFS is even better. As I showed above, "valid" states can include arbitrarily high intersample peaks, so how much...

Well, that was written by someone in marketing. Well it can go a lot higher than 3 dB if you try. If you use a signal like [... +1 -1 +1 +1 -1 +1, ...] you can repeat the pattern to make the intersample peak go arbitrarily high. This is highly contrived, though. I think it unlikely that...

That you don't know how to measure something does not make it unmeasurable.

  Every difference you hear is either imagined or measurable.  The way to distinguish between imagined and measurable differences is by doing ABX testing.  There is nothing else.

  Most of your post is right, but this bit is wrong.  You're confusing musical dynamic range with signal processing dynamic range.  No one listens to music with a white noise floor of -12 dBFS, that would sound awful.  By this definition of dynamic range, "music" consisting of a single sine...