There is compressing, distorting, and cranking up to 11... and then there is brickwalls (which is the previous, except over 9000).
See, there is nothing wrong with compressing, distorting and cranking your guitar(or some other instrument) up to eleven. It's all right. However, you probably don't want to do that to all tracks. If you do, you are exposing yourself to ending with a dull, flat, boring result (I've heard a few. Sure, there was guitars and drums and stuff.. but it all sounded so dead and flat it sounded bad regardless of what was actually playing).
Now, I do agree that live is (or should be) better than a recording.
A quick listen to a something I found on Xerath resulted in this: I hear clipping (could be from where I found it, or could also be present on the CD). It's also loud, but it's not uncomfortable to listen to. Different instruments feel like distinct, and the audio doesn't sound like an indistinct mass. Which is quite nice. And it doesn't all exactly sound like it's at the same volume all the time.