Thank you for the detailed explanation Laszlo. I do plan on making some acoustic panels and corner traps. I am going to try the cotton batts from ATS or Acoustimac and make some triangular frames for the corners and 2' x 4' frames for reflection points.
Anything you do is better than not doing anything at all. That's a good start. Doing the corners and first reflection points will help, but remember that bass is omnidirctional; high frequencies - with their short wavelengths - are very directional. So while you only need absorbers at the first reflection points on the side walls for the most part, the front walls and rear walls will reflect a TON of low frequency energy, and corner traps are not enough for effective bass trapping.
This becomes even worse in a small, nearly square room, where sound waves will bounce around in nearly even multiples.
The back wall is completely diffused with amps and guitars. Does that count?
Diffusion counts, and depending how close they are together, may be enough for that purpose, but you still have to do something about the low frequency energy pointing toward that back wall and reflecting back to your ears, to the front wall to bounce yet again, etc.
So it counts, but it isn't nearly enough. The smaller the room, of course, the more low frequencies will be bouncing off that wall. You can't escape the laws of physics with diffusion alone.
All that bouncing around is what causes the acoustical problems as the sound waves collide, build up, cancel each other out, etc. Speakers that show up perfectly flat in an anechoic chamber will have as many peaks and valleys in frequency response as lesser speakers.
In other words, the place to begin is to trap bass in the front walls, the back walls, the corners, and often, at the wall-ceiling intersection in other areas.
I would consider professionally designed panels that also incorporate a little diffusion so your room doesn't sound 'dead' since bass traps will also absorb high frequencies you do want to hear. Companies like RealTraps, ASC and others understand this and their bass traps include this.
I realize this is more expensive, but to make that room sound reasonably listenable, you will need quite a bit of bass trapping. Therefore, you don't want all the highs to be absorbed and have the room sound dead. At the very least, explore how to accomplish this with home-made panels.
On the first reflection points along the side walls, however, you DO want complete absorption of high frequencies.
I think it is awesome how many of you have the Neumann KH120's.
I don't use them, but they're very good speakers, especially for the investment required.
When Sennheiser (Neumann's parent company for years) bought Klein & Hummel, a very highly regarded, higher end studio monitor brand, they inherited some very good speaker designs, and all they had to do was change the badging. The original KH120s are from that K&H legacy.
Neumann sells very good transducers and electronics. I love their mics and use them.
You don't need a ton of amplifier power in a 10 x 12 space, so the amps built into the KH120s will adequately fill your room.
I'll post a pic of my no-big-deal, but reasonably good-sounding space below. It may help with some ideas of how what you want to do can be accomplished.