Yes, hardware quality might make a difference in fidelity. Still, 16 bit CD-quality audio is enough. The marketing of the Pono player with 24bit/196kHz is just nonsense.
And of course any listening test requires quality hardware to make sure it can actually reproduce the test-signal correctly.
> The pre-existing harmonic distortion will only serve to mask any distortion and fidelity loss from truncating to 8bit.
With dithering, smaller sample depths only decrease the signal to noise ratio. There are no distortions. The sample is chosen "badly" (but that was by design) because it contains little to no dynamics.