Can a high end sound from mid-level gear?

This is more of a two part question for the techphiles:

1) Can a three dimensional soundstage be achieved on any gear, or is it limited to high dollar equipment?

2) If so, how? If not, why not?

I know this may open pandoras box, but I would love to hear what experience has to offer.

Spatial effects are quite separate from sonic fidelity, and can be produced with lousy-sounding equipment. My first experience with stereo was simultaneous AM and FM broadcasts on WQXR New York using commonplace "table" radios. Lousy fidelity, but the stereo effect was there.
"Can a three dimensional soundstage be achieved on any gear, or is it limited to high dollar equipment?"

Not with ANY gear, but also not limited to the most expensive stuff either. Quite a spectrum exists, with definite but only partial and imperfect correlation between soundstaging performance and increasing price.
Yes it can to whatever degree the system will provide. The gear matters some, but from my experience things like room accoustics, seating position and speaker placement matter a lot more than how good the gear is.
Three factors dominate soundstage:
1) the recording
2) the speakers
3) interaction between the speakers and the room

Of these, the speakers themselves are probably the least important. You have a much better shot at good imaging/soundstage with mediocre speakers set up well than with expensive speakers set up poorly.
Sugarbie & Pabelson,
have it so right. A bit broad but I hear many systems in my job and so often a mid level system set up with care and patience to get it working right will crucify a megabuck system which has been dumped in place.
My diy room treatments have cost a minute fraction of the price of my gear and have taken the soundstaging to scary levels.
Getting the mains, isolation and placement right can ? was going to say save you a fortune (nope, it's cost me a fortune) but at least I know I'll be hearing the benefits of any further upgrades.

Not sure about the states but over hear, ny cheap tuner can be really scary with some of the BBC's broadcast - makes me wonder why I spent so much on turntables at times.

Rgds Simon
Yes. Even from low-level gear. Matching modest components with higher quality speaker cable and interconnects that optimize the sound potentiality of your amplifier, CD player, and speakers can reproduce sound with startling "soundstaging." Speaker placement is crucial and stands may offer free of charge, sound improvement in many rooms. Have heard vintage systems that have outperformed newer high end components. Trial and error in selecting compatible components/cables can bring high end results or "ear-pleasing" results to define listening quality in another way. Quality cables can greatly improve low/mid-level gear's performance and might be an alternative if an unlimited audiophille's budget is out of reach.
For mid-level gear, the addition of Dakiom "Audio Feedback Stabilizers" actually creates a more three dimensional soundstage among a number of audible improvements.
This is not to say that all the appropriate recommendations above will not get you there as well. But, as a "quick fix" to get you started toward your goal, Dakiom is easy to recommend.
Some of the Dakiom ads here on Audiogon (which you can read by typing in "Dakiom" in the search function) come across as highly opinionated, even controversial, yet the excellent audible results are achieved at modest cost.
If you want to hear want less than mid-fi gear can do, check out the sonic impact T-amp. Even using a cheap headphone jack to RCA Y cable to connect to a CD player, the sound is pretty incredible. Detailed, full and tight bass and spacious as well. All this from something that costs $27 new at Amazon. You might also be pleasantly suprised at the panasonic Sa-XR55 Digital Receiver. At $229.00 it is also pretty impressive sounding.
Thanks for the responses, but they led to another question. Can anyone recommend a definate and RELIABLE source that will give me the basic do's and don'ts for system setup, room setup, listening posistion, speaker position, etc. I've found a number of sites online that offer just enough info to get you hooked...and this all. I've been reading the Absolute Sound and have managed to pick up a handful of tips, but I need more!

Any suggestions?