In the Harman listening tests, almost nobody, AIUI, liked a flat response. See the post a few posts back for what they did like. 'Perceptually flat' sums it up nicely as opposed to 'measured flat'.
Audyssey is just one tool in the box for many. For some, of course, it is the only tool in the box and then you right IMO - it can do so much but it is not a magic wand. Acoustic treatments, careful choice of speakers and subs and optimised placement are the real route to good SQ - with Audyssey as the icing.
Kind of reminds me of what people think 'vanilla' is. Pure vanilla extract is very bitter, and only useful in small amounts. OTOH, add some sugar or other sweetener and it helps you bring out flavors. OTOH, a cake with lots of pure vanilla bean and no sweetening would taste awful, no matter how good quality the other ingredients are.