Civilian Wartime Radio - Further Notes

[Terry]

The receiver's AGC is confused into thinking the signal is smaller than it really is so it may not turn the gain down enough.  

But is it?

Surely the AGC detector will respond to the higher peaks of the signal and attempt to reduce the gain as the signal will appear stronger? [1] The actual reduction will depend on the overal amount of limiting applied and the time constant of the AGC loop.

[1] Indeed, because of the higher peak levels, it can be argued that, on peaks anyway, the signal strength is higher.