You bring up some very good questions.
Improving your audio system is a very long term endeavor. In the beginning what you don’t know is nearly infinite. Necessarily the process involves learning. As you learn your tastes change. This has certainly been my history. It is a path with many dead end forks. I have followed a few.
In the beginning there are some aspects of sounds that you are attracted by. For me, detail, slam, and an emotional connection (which I was not really conscious of). So, when I went out I would listen for improvements in this. Then I learned about micro details and tonal balance. Then… etc. So my repertoire of parameters I look to improve increased.
I assembled a few CDs to be my official audition discs. They were a few of my very favorite albums at that time. I was currently into electronic music. This was a huge problem. I was able to maximize the ethereal nature of that music and made it really magica to me, but unfortunately, all other genre sounded worse… much worse. There was so much detail that a vast majority of albums would sound terrible. This made me realize that if you are too ruthless at pulling detail off the media the result would be a lot of bad sounding albums. So I backed off from that and tried to walk a line where enough detail came, but not too much.
After pursuing this for about 10 years, I ended up with a system, which was not too ruthless, but somehow I had lost the soul of the music. It was still too analytical. So I started listening to live acoustic musical events. I would listen to pianos, cymbals, etc, individually. I attended the symphony for 10 years and seventh row center seats. All this led me to realize that my system was way too detailed with lots of good slam, but very unmusical. The venue and miking techniques stuck out… but this isn’t what happens at live musical events… it is the music and the emotional connection that are emphasized. That’s when I finally learned what rhythm and pace and mid range bloom were. The following 10 years I completely reconfigured my system. It is all tube electronics now and sounds like real music. It has the heart and the soul of music. It makes me want to tap your foot and close my eyes and get lost in it. After my max of three hours a day, I have to drag myself away.
So getting to a great sounding system is long process. I think it can be shortened considerably by emphasizing training your ear with real acoustical venues so you know what real music sounds like and then working to achieve that through your system. You have to listen enough and deeply in the real world to develop a deep knowledge and long term memory of it. This keeps the emphasis on the music and not just amazing technical feats.
Also, my system while having great detail, imaging and bass is extremely forgiving. So, unless an album is really a terrible recording it will sound great. To do this your system must focus on reproducing the key elements of the music… not just easily perceived parameters. There are companies that are dedicated to getting the music right some of these are Audio Research Corp., Conrad Johnson, VAC, and Sonus Faber.