In-Wall Speakers

In the immortal words of Lyle Gorch, "Why not?"

I believe that the general consensus is that in-wall speakers are not audiophile quality and are more of a lifestyle, mid-fi type product. However, as far as I can tell there's no reason why an audiophile quality in-wall speaker cannot be produced. In fact, there are reasons why in-wall speaker could actually be superior to traditional speaker at the same price point. First, an in-wall speaker does not need an expensive furniture grade enclosure. More money could be spent on the drivers and crossover components. Also since only one side of the speaker box is exposed to the listening area then cabinet noise (a not frequently discussed, but serious problem) should be greatly reduced. Second, the designer of the in-wall speaker has a known acoustic enivorment and should be better able to optimize the speakers radiation pattern and tonal balance to that environment.

I recognize that as a group audiophiles are a conservative group that tends to stick to tried and true technology, but if someone was to offer an audiophile quality in-wall speaker, would you be interested?

When I use the phrase in-wall I also mean to include on-wall speakers such as those offered by Thiel and Magnepan.
I wouldn't want them for my main speakers but find them more than acceptable for my HT setup. I listened to several models before deciding on the rather expensive B&W Signature 7NT. These in vertical bi-wire / bi-amp mode with tube gear is surprising to all who hear them.
I'm afraid I can't contribtute much to your conceptual questions, although I've often wondered the same things myself and agree that most in-walls are lacking in one respect or another for 2 channel listening. The sound stage is usually compressed for one.

I'll second Albert's comments concerning the B&W Sig 7's. I'm quite happy with a pair that are being used as the rear surrounds in a 7.1 HT (they are mounted in a tray ceiling in my kitchen which opens into the listening area). I've also been planning to use another pair for 2 channel listening in a bedroom system. To experiment, I placed them on top of a pair of Talon Peregrines that were sitting on Sound Anchor stands (to get the right height). I was pleasantly surprised at the results and will be installing them shortly - I can't say that I preferred them to the Peregrines but they were pretty close and it solves the space problem nicely.

I belive the higher end Niles in-walls allow for all sorts of adjustments to fine tune the off axis radiation pattern, which I suspect would make a big difference in terms of sound stage. It's equivalent to achieving the optimal toe-in for floorstanders.
I purchased Mcintosh in-wall and then had a housing built so that I could wall mount them. I saved 1000 dollars by doing this rather than buying a similar model with the same drivers.