I'm on the opposite end of the spectrum from most people here in that I've already lost 80% of my hearing, but I can still understand what you're hearing since I go through it every day. The Cocktail affect is a very logical thing to take into account. Here's something you might want to try.
The next time you are in a restaurant setting, sit back and just close your eyes for a minute, and don't engage in any conversation. Try to gauge what you can hear around you- ie can you hear crystal clear the conversation at the next table, or are you just catching the fact that there are people talking loudly but can't really make out what they're saying?
What I find happens to me is that I often cannot actually distinguish the sounds around me until I turn my full attention to the sounds. This would tie into the cocktail party theory, and it's basically your brain's way at trying to filter out the information that's coming in based on what it think's is important. Apparently, it's wrong, according to what you think you should be hearing.
Once you've sat through an experience like that, if you get a chance stop by an audiologist and tell them your experience. There are a lot more heaing tests than just the residual hearing, and being able to discern if it's brain fuctionability would allow them to give you ways/exercises to try and "exercise" your ears to hear what you want them to hear.
Whew... didn't mean to post so much but this is one of the ways I cope with the hearing I have and try to make the most of it. The more aware you are of your body, the more doctors can help you.
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Calling from deep in the heart, from where the eyes can't see and the ears can't hear, from where the mountain trails end and only love can go... ~~~ Three Rivers Hare Krishna
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