Dan Wiggins of Adire Audio has shared some interesting information about the many manifestations of driver distortion in a thread on the Sound Illusions forum.

4.4% THD is quite audible! In fact, THD in the 1% range is just entering the audibility limits. I know folks like to talk about 10%, but that’s for objectionable not audible. A THD level of 4.4% will definitely be audible, while a THD level of 1% will be on the edge of audible – if you can detect it, it will be extremely faint.

Dan Wiggins discusses how Adire’s XBL^2 technology reduces driver distortion; there is also a resulting discussion on the AVSForum.
View SoundIllusions Forum thread
View AVSForum thread