Well, the thing is that internal pickups are mainly used for practical reasons, rather than to get the best possible sound, which is why they're used live a lot more than in the studio. With a guitar cable and a pickup you can move around as you like and don't risk getting feedback from the drums etc...

I don't know how James Taylor and Neil Young recorded their guitars exactly, but my guess is that they used several external microphones aimed at different spots on the guitar. A common setup is to have one mic aimed at around the 12th fret of the guitar, and one mic aimed at the bridge - and then you blend those sounds together.

On the Tommy Emmanuel album Only, he used as many as 4 external mics and even blended in a little bit of the internal pickup sound, to record all the frequencies of the guitar. And then you add compression and reverb to further get the sound you're after. Adjusting the EQ in your recording software can have huge impact on the sound too.

So to sum it up - it is really hard to replicate a studio album sound live with just a single pickup inside the guitar. You have no option of moving it to see where it sounds best, and you don't get the sound you hear with your ears - since the sound hasn't travelled through the air, like it would do before hitting an external mic.