So, suppose the geometry of the baffle is changed as shown below. Now there are no reflections from the front and side wall reaching the listening position. I've drawn the paths of direct reflections to illustrate that none can reach the listener. We've created a "reflection free zone" around the listener - with respect to the front and side wall anyway.
[snip]
The floor and ceiling can be addressed by using an array as per Murphy, or just living with it as almost everybody does anyway.
Now, this all seems a little "too good to be true"... 
Duke and AJ, any comments? 
Chiming in late on this, but John I've spent quite some time thinking along exactly the lines you are presenting here. I am also convinced that although it might not be 'theoretically optimal', it can and/or should be substantially better in small rooms than the typical 'not far enough out into the room' speaker placement that is typically necessary.
I had my Yorkville U15s placed directly into the corners, and felt that it worked pretty darn well. The room was narrow and so I still needed some first reflection damping on the sides though. Imaging was great, although 'spaciousness' was a bit muted compared to the best systems - whether this was inherently due to a lack of front wall reflections, or was simply a matter of too much absorption overall is something I don't know.
Taking your thoughts one step farther though, I think a "Unity line array" would be the ultimate realization of this concept. A line of tweeters right into the corners, then pair of lines of mids spaced down the walls with an appropriate Unity/Synergy style xover. This would eliminate reflections entirely, and produce a coherent constant-directivity wavefront coming straight out of the corner. It would require building this into the walls to avoid any kind of a transition step from the cabinet, although I think sloped sides would mitigate that enough if built-ins weren't an option.
I have a pair of the 60" Carver planar drivers that I've been unable to sell that I've been hoping to try out in this type of arrangement but I haven't had the chance.
For non-diy though, Dukes Rhythm Prisms do look pretty good.
