My 'official' Engineering / signal-processing answer to your first question is this: It depends.
I know that may sound amusing or like I am trying to avoid the question, but as a degreed Engineer, I believe that many answers to questions really have this at their core. However, to more directly address your question, here are my thoughts (and why I say 'it depends', as you will see):
In principle, I agree with the statement that binaural recordings are best suited for headphones. The reason for this is very simple - using headphones does two things:
a) It puts the sound that was incident at each ear of the mannequin at the appropriate ear of the listener.
b) It eliminates any possibility of cross-talk between left and right channels.
In other words, because the headphones are resting upon (or in some cases, in) the ear, the left ear driver of the headphones reproduces ONLY what the left mannequin ear recorded, and the right ear driver of the headphones does the same.
When loudspeakers are used, the listener no longer has the "guarantee" that his / her left ear will only hear sound from the left speaker, and that his / her ear will only hear sound from the right speaker. Invariably, there will be some degree of cross-talk; some of what is heard in the left ear will be information from the right channel, and vice versa.
So, here is where 'it depends
' comes into play. Let's assume two sets of 'boundary conditions': Scenario "A" - A Very "Dead" Room:
Suppose that you had two relatively compact speakers in front of you. Now, suppose that these were set up in a room whereby most of the room was heavily damped (due to absorptive material such as drapes, absorptive panels, etc).
If you sat very close to the speakers (i.e. near-field) then chances are, you would experience (primarily) the direct sound from the speakers and little of the reflected sound. In this way, most
of the binaural effect would be preserved. However, this effect will also be a function of the speaker's dispersion characteristics (versus frequency) and of course, the listener-to-loudspeaker distance.
So, if you think about it, the closer you move to the speakers, the more you are in the direct field. The more you are in the direct field, the more this arrangement approximates
the boundary conditions provided by headphones. Again, the key word here is "approximates"... Scenario "B" - A Comparatively "Live" Room:
For a fair comparison, imagine that you now have the same
speakers in front of you, only now, the room, having the same volume / geometry as the room in scenario "A", has had most to all of its absorptive material removed.
Under such conditions, it will be very difficult to listen primarily to the direct field. Instead, you will predominantly hear the reflected sound - which constitutes a lot of cross-talk. In this case, the binaural image will almost certainly erode into something far from binaural.
So in essence, the binaural listening experience, like all listening experiences, really relies upon the boundary conditions.
In other words, using headphones makes the listening experience independent on the acoustic boundary conditions in which the listener finds himself / herself - and this is true whether the source material is conventional stereo or binaural. The difference however is that in the binaural case, the spatial cues (left-to-right, front-to-back) will all be preserved when headphones are used.
Tchad Blake (who has done a fair amount of binaural recording) was once asked a similar question, and had this to say (excerpt taken from the article found at this link: BINAURAL EXCITEMENT
"I know people say that the problem with binaural is that there's no actual centre, that it's very difficult to get things to sound right in front, but I've never found that to be the case. Or, at least, only when you record something that's very close to your face -- then you can get the feeling that it's coming from behind. Binaural isn't perfect, you don't get 100% accurate localisation, but I simply love what it does. It sounds fantastic and really natural and spatial on headphones. I also love the way it translates to the speakers. It's no longer truly binaural when you listen to speakers, but it has its own sound, which is really cool, almost like a fishbowl effect. You get this depth that you don't get from any other kind of stereo miking technique. And finally, it's great for field recording, because it's cheap, really portable and really simple, and I'm not carrying anything in my hands, so I can walk around, take pictures, do all sorts of things."
Now...on to your next question, with regard to proximity...
Again, the answer here is "it depends". I have recorded solo piano or other instrument recitals, and ultimately it comes down to (once again...drumroll please... the boundary
What do I mean by this? OK, revisit the two scenarios that I discussed for playback of binaural over speakers, only now, imagine that you are going to record in the two spaces.
Clearly, if you were recording in a space (leike scenario "A", above) then it would be very easy to get primarily the direct sound - regardless of whether you used binaural microphones or conventional ones. In other words, the relatively 'dead' charcteristics of the room would mean that you would get very little room effect in the recording.
So, a lot would depend on the source (instrument, or vocal etc) and its timbre. If the source were one that produced frequencies that were easily absorbed by the room, then yes, you would get primarily the direct field, and placement (mic to source) would become very important.
Now consider the opposite ' scenario "B". In this case, the reverberation of the room is dominant, and starts to look like a true diffuse field (where measured pressure is independent of location). In such a case, whether using a binaural microphone or a traditonal approach, the room will play a major role in what is recorded.
So, in essence, binaural can't 'fix' bad acoustics nor more than a conventional technique. However, I will say this - where the acoustics are truly awful and highly reverberant, a (dimensionally) small microphone placed very close
to the source or instrument will be dominated by the source and not by the room. However, this isn't necessarily realistic.
So, it seems like all things, there's a compromise. Does the project require accuracy and realism, or does the project require being part of a multi-track process etc. With binaural, it's a throwback to the days of direct to disc (for those who remember vinyl) - fi you get it wrong, there's little chance of an overdub.
Now, if you want to see and hear something really cool (Flamenco Guitar, recorded binaurally), check out this link: Humble Voice // Video // Snakecharmer-Binaural by Ottmar Liebert
All that was used here was the Neumann type KU-100 (my personal favorite) and a digital recorder. If you visit the site, please be sure to use headphones (but hey, they even remind you of that).
Anyway, it's a cool piece of music, and very convincing in its realism.
Phew...I hope that answered your questions. - Mark