I'll reiterate several points here, in a (hopefully) more organized manner; some of my points have been responded to, but some have not.
1) Who's Being Hurt?
Putting aside for a moment the question of whether these cables result in a discernible difference or not, I'd first like to raise the question of what difference does it make? Randi has, in two concurrent issues of his newsletter, publicly mocked these people, essentially accusing them of fraud, and laid down a challenge to them to prove their claims.
So, just who is it that is having their lives destroyed, to merit such a scathing attack? The people who buy these cables are a tiny sub-set of society, people who obsess on getting the highest possible level of sound quality out of their systems. They will spend literally thousands of dollars on all sorts of equipment. Some of that equipment will result in a big difference, while some of it will result in very small, incremental improvements that most of us would not notice or care about. Some of that equipment may not even result in any real change or improvement (or at least not one discernible to the ear of the person buying it).
Now, this person who's already spent thousands of dollars on other stuff, turns around and spends hundreds/thousands of dollars on cables that, in all likelihood, will not result in a discernible difference in the sound quality of their system. Ummmmm...so what? It's an expensive hobby that they enjoy, and they've chosen to spend money on these cables.
2) Why waste JREF's time/money on this?
Building on the previous, while I appreciate rsaavedra's spirited defense of the quest for knowledge, I just cannot perceive the potential to discover that some tiny portion of humans are able -- due either to genetics or to careful training -- to discern tiny differences in sound quality that most of us cannot as being even moderately interesting.
The JREF is a non-profit organization that functions largely on donations. The people who make those donations make them with the expectation that they will be used responsibly, to pursue the stated goals of the JREF. I have a hard time fitting the issue of tiny differences in audio quality falling within the rubric of the JREF's mission.
The time/energy/money that is being spent on this could far, far, far better be used on other issues that are of far greater significance, and that are causing real harm.
3) Winning makes little/no difference
If the JREF wins this challenge, what difference will it make? Its an issue that most people don't care about, because most people are never going to buy such expensive cables anyway. For the small number of people who would buy such cables, many of them will remain ignorant of the test. And among those are are aware of it, they will nevertheless dismiss it in favor of continuing their belief that it actually does make a difference.
4) Losing makes a big difference
Losing, on the other hand, makes a big difference. If there is some audio super-listener out there who actually is able to tell the difference, the following issues will result:
* It will "validate" claims made by these companies, legitimizing their sale of such products, even though the cables will still be essentially useless and a waste of money for the vast majority of users. So people will still be ripped off for ridiculous sums of money, but now they will be ripped of using the validation of the JREF's challenge!
* Others far more questionable groups -- psychics, those who claim paranormal powers, etc. -- will publicly use this as "proof" that Randi doesn't know what he's talking about. Since Randi claimed it was impossible to do this, and he was proven wrong, it demonstrates that his claims about others being unable to actually accomplish certain feats are equally subject to error. They are the ignorant rantings of an old man with a high school education, not the intelligent/informed challenges of a man who knows what he's talking about (note, this is not my opinion, I'm just stating what others would say). Sure, some people say this already; but they do so without any demonstrable facts to support them. Losing this challenge would give them just the ammunition they need.
5) All that being said...
...while I think it was an incredibly stupid issue for James Randi to get involved in; and while I think it is a waste of the JREF's time and resources to pursue this; and while I think there is potential for damage to the JREF's reputatation...
...having laid down the challenge, Randi and the JREF can hardly back away gracefully now. Randi has put the JREF in a position where the only real option is to press forward with the challenge, come hell or high water. To fail to do so would demonstrate an appalling lack of integrity, to use the JREF as a forum to publicly denigrate and criticize someone else, to issue a challenge, and then simply back off and ignore it.
6) And the protocol
I would, as others have said, consider it relatively simple to test these claims. To me, if it was possible to demonstrate that at least one individual was capable of discerning the difference in sound quality depending on the cables used, that would constitute proof of Pear's claims, and result in the necessity of the JREF paying out the one million dollar prize.
The people being challenged should have the right to choose the individuals who will be tested; inevitably, these will be audio professionals with highly attuned listening, and extensive training/experience with audio equipment.
To avoid any potential claims about even tiny differences in sound quality, only one set of equipment should be used. The individuals being tested will listen to a particular recording using one set of cables, then listen to exactly the same recording using another set. This should be repeated at least five times for each listener (in other words, listen to five recordings twice each), and the listener must indicate each time if the quality of sound is better or worse.
The cables should, obviously, be in a position where they cannot by any means be observed by the person being tested; and should be switched randomly each time.
Random chance would indicate that, if it is not possible to discern a difference, the listeners will guess correctly approximately 50% of the time. If a person gets 8 or more correct answers, they will be asked to repeat the process two more times. If they get a similar score on the two subsequent tries, they will be considered to have passed the challenge.
It is necessary for only one person to "pass" the challenge to legitimize Pear's claims, and require payment of the one million dollar prize.