You can hear in multiple dimensions because, as the original article mentions, there is some post-processing in your mind due to the time delay between sounds entering your left ear and sounds entering your right. Just because your ears are aligned on a single axis does not mean that you cannot perceive in multiple axes. No moving of your head is necessary to perceive in more than one dimension.
It actually also works because a sound registers differently based on the direction it travels through your own head (i.e. your skull itself is an occlusion source) - your brain recognizes front vs. back based on how your own head dulls the sound
I assume the shape of our ears also affects the sounds, depending on the location of the sound. This converts vertical location into frequency shaping.
And I wonder, why else would we have such oddly shaped ears?
You would be correct. The shaping of the pinna (and resulting sound reflections) help us determine the height of sound sources, even if they're right on our midline.
I listened to these so much several years ago (in particular one with somebody shaking a matchbox) that my brain apparently realized, to some extent, that it was being tricked. Ever since then, recordings like this don't work properly. Anything that's supposed to sound like it's coming from in front of me gets flipped around so that it's behind me. It's very strange.
Put on some headphones and listen to this and tell me you cannot visualize it in 3-D:
http://www.youtube.com/watch?v=YuxaOO6PsAw
This is a binaural recording. More info on these here: http://en.wikipedia.org/wiki/Binaural_recording
You can hear in multiple dimensions because, as the original article mentions, there is some post-processing in your mind due to the time delay between sounds entering your left ear and sounds entering your right. Just because your ears are aligned on a single axis does not mean that you cannot perceive in multiple axes. No moving of your head is necessary to perceive in more than one dimension.