His study found that very high levels of low order distortion (30% second harmonic) were inaudible, but very low levels of the type of high order distortion produced by large amounts of negative feedback were quite audible and highly objectionable
I assume you are refering to Intermodulation Distortion or IMD distortion in an amp that is oscillating from large amounts of negative feedback. I agree that this is far more detrimental to the sound and something our ears seem quite sensitive to. Harmonic distortion is often indistingushable from the real sound of the instrument because the pitch of the note does not change (the note becomes fuller or leaner sounding). Even harmonic distortion is particularly hard to discern as your physicist friend points out. My understanding is that odd harmonics are more easily discerned, although still not nearly as easy to discern as IMD.
Hearing HarmonicsIMD distortion is one of the best arguments for promoting active speakers. Separate amplification for each driver over a limited bandwidth can only help to reduce IMD distortion significantly. Compare this to passive full range speakers where the amplifier must control the woofer at 40HZ and the tweeter at up to 20 Khz....hardly suprising that such a broadband system introduces audible IMD due to the combined interaction of all the drivers, the crossover and the amplifier fighting to control them.