Interestingly, I worked at Philips Hasselt in 1996, just before the demise of DCC. And as a matter of fact, I not only met some engineers who had worked on the first and second generation of DCC recorders there (who told me among other things that they had tested DCC with TDK SA-X cassettes), I also know there was another group working there on the CDR-765, the first audio CD recorder by Philips (the 775 is its successor with a player and recorder). A friend of mine who I’ve known for a long time, wrote or co-wrote the front panel software for the CDR-765.
So yes I think you’re probably right that Philips saw the audio CD-R as the next step for audio. Philips wasn’t doing so well in those days: Widescreen TV and computer monitors were doing great and CD-R was starting to get cheap enough for prosumers. I bought a CDR-3610 CD rewriter for my computer (also built in Hasselt) through the employees store in those days too. But they had canceled CD-i and were going to cancel DCC.
If they could make audio CD-R(W) the “next standard” in audio, they could keep selling existing gear such as car stereos without lots of new investments in newly developing technology. They could reuse what they already had. I bought a Philips CD player car stereo to replace my DCC car stereo, and took a rewriteable CD with me to pop into the car CD players that were on display to see if any of them played CD-RW. Most CD players didn’t support RW at the time so I was pleasantly surprised when I found out that there was not just one car stereo that worked – all of them did!
Unfortunately as you said, the Audio CD-R tax was a problem (though easy to work around) and of course there was already a large number of people who liked MiniDisc, and CD-R(W) was never going to have the edit features that MD had, such as deleting a song and replacing it with another one. So it was pretty obvious that no-one was going to be interested.
Audio CD recorders were never in the least bit interesting to me: I could record perfectly fine audio CD-R(W)'s on my computer with a recorder that had been cheaper than the CDR-765 and without the need to pay extra for the special CD’s. And I could edit the audio in whatever way I liked before I committed the recording to CD. And I could record CD-ROM’s too. The audio CD recorder was a solution without a problem.
===Jac