S -- So we have progress! I know you posted various copies of schematics your design is taken from, but a fresh, accurate copy would help here.
I suspected as much that the feedback level was extremely high, and apparently you found that is the case. For lack of any other data at this point to work with, I would continue to go forward targeting a 20 db level. This is a good level -- that when properly applied -- will adequately lower distortion and internal impedance, allow for solid stability, and all while not causing the amplifier to sound choked.
The rounding you are seeing now is due to excessive loop and HF gain compensation in the circuit, and will require adjustment to achieve a more appropriate response. Understand that at this point however, some values and configurations used will best determined by trial and error.
The Zobel network across the output is used in a number of designs to maintain a load on the amplifier at high frequencies. It is at these frequencies where phase shift in the amplifier -- when completely unloaded -- can reach the point where the negative feedback actually becomes positive feedback, causing the amplifier to "take off". Early feedback amplifiers suffered greatly from this problem, and the Zobel network strapped across the output was one method to help avoid it. For example, take a look at the schematic of the Heath W-3M, versus the reissued W-3AM. In part, a Zobel network was added to help cure the problems of the earlier model.
There is a general process I can help step you through, but first please post an accurate schematic of where the amp is at this point before continuing. Also, may I assume that the LF instability you noted has also disappeared with a more appropriate FB level in place?
Dave