I think that sometimes, the musician/singer on stage is relaxed (another tai chi metaphor) and unselfconscious. Maybe the performing is secondary to the pleasure of the act of singing for others, of playing the song well, of simply being content with what one is doing at that moment. This communicates itself to the audience as being present, and this then allows the audience to be present. Anyone can do this as a performer, but not everyone does because we all get up on stage for different reasons. All performers, sooner or later, have difficult nights; not all gigs are nightmares. I think someone wrote in this thread to believe in your music--to me, that is the key.

Along with the concept of flow, try the concept of galumphing, which is the idea that in order to evolve, one must first be able to galumph or make mistakes (from the book "Free Play: Improvisation in life and art," by Stephen Nachmanovitch).