We investigate how audio augmented reality can engender new collective modes of musical expression in the context of a sound art installation, ’Listening Mirrors’, exploring the creation of interactive sound environments for musicians and non-musicians alike. ’Listening Mirrors’ is designed to incorporate physical objects and computational systems for altering the acoustic environment, to enhance collective listening and challenge traditional musician-instrument performance. At a formative stage in exploring audio AR technology, we conducted an audience experience study investigating questions around the potential of audio AR in creating sound installation environments for collective musical expression. We collected interview evidence about the participants’ experience and analysed the data with using a grounded theory approach. The results demonstrated that the technology has the potential to create immersive spaces where an audience can feel safe to experiment musically, and showed how AR can intervene in sound perception to instrumentalise an environment. The results also revealed caveats about the use of audio AR, mainly centred on social inhibition and seamlessness of experience, and finding a balance between mediated worlds so that there is space for interplay between the two.