Do audiophiles use equalizers?
It seems like audiophiles refuse to use equalizers yet in order to get a flat response most of us have to use one. Now of course, like most things, it can make things much worse, perfect example is most church PA systems. If you use pink noise and a frequency analyzer it can make things much better.
Does EQ degrade quality?
Yes. It will reduce the quality of a good source, and you should be able to hear the difference in a high transparency rig. The benefits of equalizing may outweigh the downside of loss of transparency for some kinds of music, including the live tapings that you describe, which arent exactly high quality.