You can read all about our setup for recording and playback on the VMPS Circle in the 'We did it" thread.
We did unprocessed DSD recording from a stereo mic (Sennheiser 800's in X/Y), no mixing. Mic was about 12ft from the piano, sax and string bass, about 16 ft from the percussion, and singers stood about 3ft back.
Since we recorded and played back in the same environment considerable adjustment of performers and speaker setup was necessary. Thanks to our SDE system we had digital crossovers and seven bands of parametric EQ available, plus considerable acoustical treatment, all of which was required to take room characteristics such as bass modes and reverb time (doubled by the recording process) out of the playback.
It took several days to get it right, but the results prove it is possible to make the best of today's gear sound almost exactly like live music.