In my case, where my speakers are quite respectable (hehe) but placed as unobtrusively as possible in the living room, and therefore far from ideal positions, the Audyssey's time-domain filtering helps the sound much more than frequency-domain EQ alone.
I noticed that the target overall correction (at initial impulse before any reflections) being done by the Audyssey to all my front speakers is close to nothing (based on the graphs it generates for these speakers). But switching between Audyssey On/Off definitely sounds night-and-day different, so it must be the time-domain thing (on effects of reflections) doing much of the magic here.
My speakers are close to the wall, and sits on top of a cabinet. But with Audyssey, I get suprisingly good soundstage depth, nice imaging, and detailed overall sound... good as I heard these speakers get, including a properly positioned set on stands. BUT, the room acoustics weren't too bad to begin with, so Audyssey helped me a lot, but it's no miracle.