That hasn’t been my experience. During the last couple of years I’ve helped two friends install 950s in their systems and in both cases the 950 sounded excellent with acoustic music. One of these was in a 5-channel bedroom system where the owner had a DC-2 in his main living room system. Naturally, we couldn’t resist the urge to do a A-B comparison. After level matching as best we could (RatShack voltmeter at the outputs) we did a blind comparison. The only difference we could detect with any consistency was that the 950 sounded like it had slightly better resolution. Not surprising, considering that the 950 had technology and components that were 3 to 4 years newer than the DC-2. (FYI, the audio section of the DC-2 is identical to that of your MC-1, part for part.) In the end, it turned out that a small adjustment of the DC-2’s treble was enough to dial away most differences we heard. Still impressive, considering that Lex cost multiple times that of the 950.

Over the years I’ve heard the ‘sounds great with movies but not with music’ charge repeated over and over again about Lexicon processors. (Makes me wonder how it handles music in movie soundtracks.) It’s not surprising to find this damning-by-faint-praise now leveled against the 950. One of the traits I’ve noticed that’s common between the 950 and Lex pre-pros (and even Meridian gear) is their sound: clean and neutral. By comparison, many high end pre-pros sound coloured; but it is precisely this colouration that audiophiles often label as "musicality". As you’ve discovered (see quote below), the only way to get this supposed "musicality" out of neutral sounding pre-pros is to actually colour the sound; something the Lex and Meridian processors were specifically designed to do, via their signal processing. The only Dolby processing that allows you to delay the surrounds and control steering is the PLII Music mode, for which the 950 does not ignore any aspect of musical reproduction. PLII is implemented exactly the same on the 950 as it is on Lexicon’s MC-8 and MC-12. It’s a product licensed form a third party and conforms to the parameters set forth by Dolby Labs.

The other DSP functions you mention may not be Hall or Jazz Club modes, however they are specifically part of LOGIC7 processing which is proprietary to Lexicon. Considering that those features (Surround Rolloff & Rear Delay Offset) are not even available on the LOGIC7 found in H/K receivers, it is unrealistic to expect them in the stock processing that the 950 has. As you yourself said, there's no free lunch nor cheap grub. If you want features specific to Lexicon processors, there’s only one place to find them. And you gotta pay the price. As Gonk mentioned, the MC-8 might be a better fit for your needs. But hang on to your wallet because the the best street price I've found for the MC-8 is still quadruple that of the 950.

BTW, comparing pre-pros from various manufacturers to the ones from Lexicon and Meridian can be a bit different than the usual comparisons, especially when it comes to the processing technology. Unlike most processors, which license their processing (from Dolby, DTS, THX, etc), these two companies make processors with the express intent of being platforms for their proprietary technologies. Neither do most pre-pros, including Lexicon’s flagship MC-12.

Best,
Sanjay