The weakest "link" in the "audio-chain" (if you exclude the room) are passive speakers with distortion above 1%
The best speakers i heard to date are from a german company called Backes & Müller. Active crossovers, each speaker has its own poweramp and a sensor attached to the membrane. The signal of the sensor is fed back into a comparator which calculates the difference to the music signal, this is then used to force the speaker to follow the music signal exactly.
>On the basis of physical factors all drivers make mistakes, which one must accept in passive and uncontrolled systems. In contrast, all BM drivers are a part of active error correction systems.
>Active loudspeakers know no conduction loss, no impedance issues; have faultless crossover performance, exact phasing, an optimal amplifier-chassis ratio, more actual output stage power at their disposal, quicker impulse processing and higher dynamics. All of this produces active regulatory intelligence. A sensor system continuously compares and corrects the membrane movements with the actual music signal.
>B&M uses two types of negative feedback: inductive and capacitive. Intelligent electronic fuses ensure that the entire system is reliably shut down in the case of an impending overload. The BM electronic crossover splits the music signal into individual paths of respective frequency ranges and allocates these to their individual output stage. Every individual output stage drives to its respective driver, optimised for its frequency range.
from http://www.backesmueller.de/en/b-m-technology.html
Pricey and not DIY friendly, but you can pick them up used on ebay for "peanuts". W0as thinking about buying an BM8 (3-way) refurbished for 2800 Euros, BM10 (4-way) refurbished costs 10000 Euros, got a BM12 (5-way) used for 1400 Euros.
The company is now owned by http://ksaudio.com