Late to this thread it seems...
For me the test of a great cover band is the intangible. I'll try to put this into words. Does the music pass the smell test? Or, does the band have the "it" factor? Does the band and the music come across and connect - among the band members and with the audience? It's a basic gut-check thing.
Cover bands are usually playing in places and with audiences that want to have a good time. Does the band deliver?
A lot of factors go into this. Having a blast while you play is part of it, but beyond enjoyment it's the band being in the zone and rising above themselves, loving it, and all that synergy stuff. Audiences respond to the gut-check and the room becomes ONE.
For me, that's the litmus test of a great cover band.
(Some might rip me for bringing up something that isn't music per se, but all about having an "on" night. Well being "on" does involve the music too. A great cover band can go out and have an "on" night by choice. Read the audience, shift in the moment/set-list, etc. It's organic. A great cover band gets this and does it, and succeeds - where other bands would fall flat - no pun intended).