Re: Tyne Daly, if people say that she sounded in the theater like she does on the recording, then they saw her around the time they made the recording (or some other time she was sick). It was common knowledge that she barely made it through that session, and even in an article covering the recording session (can't find it now or remember where) someone stated "She's clearly indisposed, but she's gonna make it through".
She was never Merman, but the two times I saw the show she sounded more than twice as good as she does on the album. It was never some astonishing instrument, but just compare her on that to her recordings of On the Town or Call Me Madam and it's clear she was really suffering and struggling in the Gypsy studio.
Re: Grind, which someone mentioned way back, Leilani Jones was in fact sick and made it through the best she could... Ben Vereen and Timothy Nolen were both even more under the weather, if memory serves. Nolen I believe tried to get through one or two songs and went home early, with the remainder of his vocals being looped in later. Vereen, on the other hand, was so sick he didn't even make it to the studio, and they had to plan the entire album so that his entire performance could be overdubbed to the orchestra and other vocals after he got better. There's a trio between Vereen, Nolen and Jones and I'm pretty sure she sang it alone in the studio that day, and that all 3 of them actually recorded their performances at different times. Whoever produced the album did a pretty valiant job, especially considering technology at the time, all things considered.