Auralization systems for auditory research should ideally be validated by perceptual experiments, as well as objective measures. This study employed perceptual tests to evaluate a recently proposed binaural real-time auralization system for hearing aid (HA) users. The dynamic localization of real sound sources was compared with that of virtualized ones, reproduced binaurally over headphones, loudspeakers with crosstalk cancellation (CTC) filters, research HAs, or combined via loudspeakers with CTC filters and research HAs under free-field conditions. System-inherent properties affecting localization cues were identified and their effects on overall horizontal localization, reversal rates, and angular error metrics were assessed. The general localization performance in combined reproduction was found to fall between what was measured for loudspeakers with CTC filters and research HAs alone. Reproduction via research HAs alone resulted in the highest reversal rates and angular errors. While combined reproduction helped decrease the reversal rates, no significant effect was observed on the angular error metrics. However, combined reproduction resulted in the same overall horizontal source localization performance as measured for real sound sources, while improving localization compared with reproduction over research HAs alone. Collectively, the results with respect to combined reproduction can be considered a performance indicator for future experiments involving HA users.