Audiophiles can look at the recorded media as a standard. Hi-fidelity is all about getting as close as possible to what the recorded media is all about. That means, one has to be exposed to so-called REFERENCE systems that eschew the wonderful qualities of Neutrality, Transparency and Accuracy in any of their components from the record all the way to your ears. If your speakers and the totality of your systems at home come close to those Reference Systems or do have them alright, then perhaps you've reach the zenith of your audiophilic journey, and have reached the point beyond which the law of diminishing returns apply.
Some audiophiles short cut the route by attending as many live musical events as possible from concert halls and studios to get a feel of what real music sounds like. (Not open air live event with crappy PA systems.) That way, their standard becomes LIVE music and coupled with their subjective assessment of what is LIVE from their recollections, they then fashion their sound systems to sound closest to such recollections. Never mind if the sound is nowhere near what the recorded mix had intended. So if your speakers and your gears in general do sound like what you remember from a live concert sound, then perhaps, you've reach the point where any further upgrade becomes meaningless.
Also bear in mind that some AV shops have accoustic treatments that can make a speaker sound impressive. Only to be dissappointingly anemic once you install them at home.
A live gig should never be compared to a studio recording although I have heard some really well recorded/mixed live recordings and gigs. That's a classic case of apples and oranges. Live can sound good or even great but it's far from being similar to a good studio and that brings me to another point- there's no reference for recording studios. A lot of them tend to use specific speakers pretty often but the rest of the equipment, the room size/treatments and effects/electronics tend to vary greatly.
Someone who has rarely if ever heard live music, never played an instrument and was never close to an instrument being played- they will never know how it really sounds. If they like the way their system sounds, great. If not, they have no real basis for knowing if it sounds "correct".
You bring up a great point about room treatments. Too many people are willing to spend tens of thousands of dollars on equipment but completely neglect the room's acoustics. This is so far from being the right way to go about setting up a system, it's ridiculous. Only after the room is relatively neutral, can speakers be auditioned and selected. Any other sequence is backward. Good results have been gotten by doing it the standard way and then tweaking the room but it's a lot more efficient and logical if the room is correct in the first place.
You also mentioned diminishing returns- some people don't know what really sounds accurate or even good. Many who either have never heard a really great system or are new to trying to improve a system think loud=good, throbbing gristle bass=good, screaming treble=good or something equally absurd. I know someone who referred to my car stereo as sounding really "clean". It wasn't that
clean at that point and it needed to be EQ'd better but it did sound good for some things, especially drums and guitar- bass was decent but it did image well. Nothing really special, though. For the ones who have no idea of what really sounds good, it ends up being a frustrating, expensive journey.