This is a very good thread. I already read some stuff about the loudness issue and a friend once told me about bands from the 70s recording their music with much more difference between the loudest and the most quiet parts than most of today's musicians.

I just found this video visualizing the problem: http://www.youtube.com/watch?v=3Gmex_4hreQ

does the graphic in the first post indicate that digital recordings have headroom above 0db? or am i misreading it?

0dB AL is an "assumed level". It is arbitrarily defined because it requires an assumption to be made about the program material.

Example:
FM broadcasting standards in Europe require the program content to have peak levels at least 12dB above the RMS average. So in this case the headroom for the broadcast with be 12dB.