At reference level my system sounds harsh, it's difficult to find detail in all the sound going on, and my speakers seem completely overwhelmed with the amount of sound they are required to reproduce (running 4.1 - no center.)
If I turn it down to -10 to -15 db it sounds cleaner, highs aren't harsh anymore, effects are distinct, the overall experience is much more enjoyable.
Is this a limitation of speaker components (polk audio RT3 bookshelves nearly 10 years old)?
Is this a limitation of receiver (Yammie HTR-5960 100 watts @ .06% THD 20 Hz-20000 kHz) in a room nearly 2400 cubic feet?
Is this going to be a room characteristic and sound panels will be required?
I'm sure it can/will be a combination of everything, however, I'm interested in your opinions.
Just curious.
Without some sort of testing, there is no way to be certain which is the limiting factor. As a speaker moves closer to its excursion limits, typically the resistance to its movement becomes greater, and therefore the dynamic range becomes slightly compressed. Of course, as an amplifier is pushed closer to its limits, it becomes less able to produce more power to drive the speaker. The limiting factor within an amplifier could be any of several different things, such as the output devices (transistors, ICs, tubes) or the power supply.
With all systems, there is more distortion at the limits of performance. That is, as you turn up the volume very high, the distortion increases. How high "very high" is depends upon the particular equipment.
If you really want higher volumes, you can experiment with replacing either the speakers or the amplifier, obviously buying locally from someone with an excellent return policy so you can return the item(s) for a full refund if it does not help. But before you decide you want higher volumes, I strongly suggest doing an online search for the connection between "loud noise" and "hearing loss". If you wish to be able to hear your system well into the future, you will need to keep the volume down within reason.