I ran more tests. madplay is fine on Mac.
I used both madplay and mpg123 to decompress a file to wav. The wav sounds the same on both outputs.
It sounds fine from aplay. It sounds bad (again) from audacity.
It seems that on this machine, different programs/device drivers yield very different results.
Any ideas what is different between these programs? (which drivers to they use... /dev/dsp? some alsa driver?) Perhaps there is some ioctl or something that isn't being done properly for my card on some programs...
aaron