"The latter technique I mention plays well on phones and speakers for smaller groups."
Binaural recordings work well not only for small chamber groups but for any size group. These two binaural recordings by Newport Classic are both of a full orchestra, and the sound on a good headphone set up is amazing:
The Neumann KU 100 binaural head used in the recordings was placed 20 feet behind the conductor and 10 feet above his head. Listening with eyes closed,
you are there. "Chasing the Dragon" records is still exploring the use of the Neumann system.
"Headphones, even good ones, do not have a realistic sound stage playing most recordings."
I listen almost exclusively to classical music, and I would disagree with this as a blanket statement when it comes to classical recordings. I listen to a lot of choral music which is recorded in cathedrals by engineers seeking particular acoustics for their recording. The sound stage presented on some of these recordings is almost as good as a binaural recording, which is about as good as it gets.