Seems to depend on the source audio too. The demo at the top of the page sounded good, but in the demo at the end I tried some rock music that already has a pretty wide stereo image, and it made it sound very 'squished' and like it was coming from inside my head, on top of lots of weird distortion/phase issues.

That sounds intriguing. I've only noticed it making sounds feel wider, or at most do nothing rather than squishing an already wide sounding track. What track were you trying, I'll see what's going on.