John,
To the 'trained ear' I am sure you are correct.
But my BOSE stereo is NEVER distorted (to the plain ear) and is always as clear as can be. I found it lacking some mid and low bass also, that's why I bought a 300 watt amp and a 10 inch sub. It's perfect now.
My friend has an ES300, and I personally don't really like the stereo, definitely not a bad stereo though. Though you are probably a better judge of that.
So to the normal ear, I think the BOSE is a good sound system, albeit some lack of bass. And it's not the loudest, but always as clear as can be, to me anyway. And I know distortion when I hear it (for the most part, I think...).

__________________
2006 E350 w/ 155k miles (Daily Driver)

Previous:
1993 300E 3.2L Sedan w/ close to about 300k miles
2003 E500 Brilliant Silver (Had 217k miles when totalled!)
1989 300E with 289,000 miles (had for <1 yr while in HI)
03 CLK 500 cabrio (Mom's)
2006 C230k (Dad's)
1999 S420 (Mom's/Dad's)
2000 C230k Sport sedans
2001 CLK320 Cabrio (Mom's)
1995 C280 My First Mercedes-Benz... (155k miles. EXCEPTIONAL AUTOMOBILE. Was Very hard to let go of!)