Some thoughts:
* Todd Rundgren citation is spot on. Let's not forget where he did a lot of tracking: in his home. Some other musicians who have had (cough) moderate success with home recording include Moby and Fatboy Slim. Norman's work involves tons of sampling, but Moby gets some fantastic ambient sounds from a small room.
* Tracking and mixing are different. Post-production is where you can leverage the most from a great listening environment, board, etc. I used to work with a group of people who were affiliated with a semi-legendary
studio that turned out several
classic albums (Grammies, platinum sales, etc.). Can't tell you how often the tracking was done elsewhere (from coat closet 8 track 'studios' to practice facilities) and mixed down -- with great results -- at 'the big room.'
* Some of the 'pro' studios from the past, from a pure tech-spec standpoint, weren't all that. And some - were. It's hard to replicate a great room through a Neve whether you are home recording or on a 'commercial' budget but it doesn't gel. "Magic" is a term that lacks technical specificity, but until you are doing MASSIVE amounts of engineering and architectural design, there is a bit of luck as well as hard work and knowhow in setting up a good sounding room.
* Signal processing follows Morse's law for me. Gets twice as good for half as much ever few years, IMO. See: mixing vs. tracking. It is now very easy to get source tracking done in a home/amateur environment that yields sonic results as good as some top notch "famous commercial"
studios of 20 years ago. Again - the difference comes in the final mixdown.
A lot of that is not just 'gear,' but that old friend 'skill.' A mixing engineer with great ears and ability can do amazing things. Most of those folks prefer using good gear and so have access to full
studio set ups. BUT ... I've also seen platinum level producers do terrific work on home gear. And release it. And have people eat it up.
Whoever wrote about getting the most from what you have was right on. There is no substitute for knowledge and/or expertise, and it is the yin to the yang of gear's tech specs. They serve and enhance each other.
Give me a good engineer and a decent home
studio and I can promise you a better recording than a doofus in a "pro environment."