The Rotel is better because it is indeed more accurate than the Sim. Period.

Take the MF A1000 example, which with some records sounds very niceeeee... I have not found a single record of mine which I prefer listening through the A1000 than through the 1062, enough said?

As for the distortion thing... as Tube Dude put it: distortion is everything which is at the input and it isn't at the output.

If we think about negative feedback we are in fact compensating for the distortions in the output but not by adding another kind of distortion but simply by amplifying the difference signal (which is the distortion itself) between the input and the output and then feeding it back again. (The balanced line example is exactly this but taken to the extreme.)