El: Here's a few responses to your questions:
1. If a transformer removes "grunge" (that must be some technical term that I am unfamiliar with) why doesn't the transformer that is already in the audio equipment do the job?
Transformers do remove AC noise to some extent, but not to the level that a good quality low capacitance isolation transformer can. As mentioned in another thread pertaining to various transformer designs, some transformers are FAR more efficient at this than others. Obviously, there are different designs for different applications.
2. Why doesn't power supply capacitance do the job? If this is a real problem, a PS filter using a series inductor between capacitors would be a lot cheaper than a transformer.
Both comments are somewhat valid. Large quantities of capacitance in the power supply can and does act like a filter to some extent. Then again, RFI can "ride on top of" DC, so filter capacitance doesn't solve all of our problems.
An inductor in series with the PS can provide many of the benefits of an isolation transformer. Only problem is that the inductor produces yet another high intensity EM field inside of the component, probably won't pass as much current and won't be quite as effective in terms of total noise reduction. It could be a step in the right direction, but may also have some drawbacks that would require careful attention to detail. Making the higher efficiency noise filter external to the device removes the complication and has other benefits to it.
3. Why does the AC power need to be "grunge" - free? Low powered amps can use the applied audio signal as their source of power.
Please clarify this one. What i got out of this is that the signal being applied to the amplifier would actually become the source of power for the amplifier itself. If that is what you are implying, such a design is fraught with problems to say the least.
4. Of the many people who have bought power conditoning equipment, how many had measurements of their AC power to determine if they had any "grunge" to worry about?
Couldn't tell you any of the specifics. I can tell you that i have "looked at" and "listened to" what is being fed to us via the AC lines and it is FAR from being a "spectrally clean" 60 Hz waveform.