I agree that Sunday Morning is a better song than I'll Be Your Mirror, but Nico's voice is just strange enough that it kind of works a bit better with the more experimental stuff, to my ears-- To some degree, I feel that way about I'll Be Your Mirror as well, though. I would have preferred if the entire album had that wild experimental feel to it.
For some reason Here She Comes Now doesn't feel out of place on White Light White Heat to me, though.
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Regarding live VU performances, The Complete Live at the Matrix was released a few years ago in remastered near-studio quality, and the performances are fantastic, IMO.
It is a more laid-back, loose, and rough-around-the-edges feel than the studio recordings, but I would argue that there's a really beautiful charm to it that's lacking in the studio recordings-- Sweet Jane in particular is superior to the studio version, IMO. Waiting For the Man sounds fantastic with the teeth removed, and there's also a 30 minute laid back version of Sister Ray that I find fascinating.
It's at the very least better than Loaded, IMO.
I think a big part of why their live recordings are generally underwhelming is due to them being a band that nobody gave a rat's *** about at the time. Most bands with great live recordings are famous enough that virtually every live performance gets recorded and only the cream of the crop end up getting released. With VU, it's more like.... once in a blue moon, someone with a tape recorder happens to have the foresight to record a random live performance, and everyone ends up treating it like it's the holy grail even if it's a near-unlistenable recording of a sub-par performance because hey, it's better than nothing. Unfortunate that there aren't really any great live recordings with John Cale still around, though.