Richardp01, This is fourth time this week I've tried to respond to your question with attention it deserves. Every other time I lost the contents just before sending. Oy! In the mean time your follow up posts answered a lot of questions I had for you at that time.
Obviously you have found that for your preferred set up, in your room, the 3.5's sans eq with the Velodyne DD12 works better for you. Who am I to argue with your success and satisfaction?
I generally suggest keeping the 3.5's eq in the system for a variety of reasons, even when using a sub.
One can actually get deeper bass response from some of Thiel's smaller, less expensive models than using the 3.5's without the eq.
Very often multiple sources of bass output will smooth out bass nulls and peaks better than bass output from a single source.
Unlike the dedicated bass channel such as is found in home theatre audio, stereo bass when summed to mono can send conflicting signals, compromising bass output.
Typically I would expect two 10" woofers to have less energy storage and more agility than one 12" woofer.
As for the effect of the eq on the rest of output, I have no doubt that you hear what you do, but I am surprised. It's interesting that of the reviews printed around the time of the 3.5's release, such as those found in the Absolute Sound, HiFi Heretic, Sensible Sound and the original Stereophile review from Anthony Cordesman, only the later Stereophile review (and the only one that readers can now find on line) from then editor and owner of Stereophile Larry Archibald (who BTW kept the 3.5' s as his reference loudspeakers for longer than any other speakers other than the later and much(!) more expensive Thiel CS 5's) found any quibbles with the eq. Even he found the 3.5's better with than without the eq. Interestingly enough he suggested a bit of sharpening, of higher frequencies with the eq which is quite a bit different than the smearing you've noticed. FWIW, I do agree with Larry Acrhibald's opinion of the eq, including his observation that many audiophile often already have a prejudice to these type of devices. Such different impressions happen often, for example, as I recall the reviewer for The Absolute Sound found the 3.5's to be a bit (paraphrasing here (it's been a long time)) too buttoned down and reticent, where as Larry Archibald found them a bit forward. Go figure. FWIW, I find them neutral.
Your suggestion of relieving the demands on your 100 Watt tube amp is not without merit, but keep in mind that the eq starts to increase impedance and ergo sensitivity as it kicks in which mitigates the demands on the amplifier, especially a tube amp. While a 100 Watt tube amp could certainly be adequate depending on room and desired sound volume, a bigger amp could negate those concerns.
As for your use of the Velodyne DD 12, I think that the placement of which in your room might have something to with the improvement you've noticed. As does the digital processing it provides. That processing is especially interesting to me, as I've been long considering using a digital room correction device with adjustable eq function as a replacement for the Theil provided eq. As you've discovered, the likes of which can adjust the bass response to ones particular room rather than some anechoic standard. I've yet to find a budget friendly unit with enough eq adjustability to match the 3.5's equalizer yet. As for the recommendation that others try the Velodyne, I think it important to note that the original asking price of the Velodyne DD 12 is more than the original cost of the 3.5's! I would imagine used prices being similar. Furthermore, if one were to consider using a subwoofer, I'd recommend considering using two rather than one, for the reasons above, even if that meant using smaller ones.
