Speaker upgrade help?

What amp are you using? I'd avoid upgrading speakers if your amp is clipping. 1 watt of distortion can ruin $5000 speakers while 200 watts of clean power won't hurt even modest speakers. I'd bet that you could get a whole new life out of the speakers with double or triple the power and a much warmer and cleaner amp.

I occasionally indulge in loud sessions and it doesn't sound like clipping when the image starts to flatten out

This a common complaint with nearly all speakers targetted at consumers.You might research speakers with pro type drivers such as some Dynaudios - the Tannoys already mentioned,JBL, Meyer and others.

The problem with cheap drivers with small voice coils and long coil in small magnet gap is that with increasing SPL they rapidly lose linearity and compress. This is due to cheap design and the voice coil getting extremely hot. Consumer designs are as good at lower levels but can't respond dynamically when driven really hard - flat or dull is exactly how they sound.

Shadorne: My buddy the sound engineer/electronics wizards suggested some pro monitors just last night. So you're contention is I'm just smoking the coils a bit? That was my guess.
Elevick: Dynaco spec'ed out Under distortion @ 235W each side. I don't believe I'm clipping. My guess is the 685 coils would be goo if I pushed them anywhere near there.
Daverz: The ceiling of the room is speckled plaster and may well be part of the harshness. The rest of the room is extremely well damped: upolstery, rugs, curtains, corner- breaks, old Maggies, etc.

So you're contention is I'm just smoking the coils a bit?

Yes in teh majority of consumer designs:

When the woofers have large excursion they lose linearity and oomph because the coil sees a lower magnetic field.

When they get hot (typicaly around 150 degrees celsius) the resistance rises and they compress as well as making the crossover inappropriate (designed only to work when voice coils are cool). It takes as little as a few seconds to heat a voice coil.

In both cases this results in lots of distortion and the speakers sound dull, flat and loud instead of effortless.

A good pro design should play much much louder but won;t sound loud because of thelack of distortion.

Most consumers think their music is extremely loud when it is not...they are usually only overdriving their system and listening to large amounts of distortion & compression(distortion is perceived as loudness by our ears/brain)

In general (there are of course exceptions): A high quality pro speaker comes with ugly cheap cabinets and expensive drivers. A high quality consumer audiophile speaker comes with beautiful expensive cabinets and ugly cheap drivers.

Nice quality woodwork is expensive and is an obvious source of pride and joy to consumers. Good quality drivers are much less obvious to an untrained listener. Manufacturers simply make what people buy/want.

Have had the 803 Nautilus and matched them with a one of a kind McCormack DNA-2 Deluxe (Rev. Platinum). They eat power endlessly. You need the finest amplification to drive them and the bass will still be on the lighter side.

Replace with the NHT Xd system. You can not really go wrong with the 2.2 and NHT is selling them direct for 3K. Very hard not to take advantage of this great value.

Forget the passive speakers. The future is active for the 21st century.
You get a five year warranty with NHT. It's a steal marked down to 3K from 7K+.