@AudioShockwav - you're right!
There are several conditions happening here.
When you "turn down the carrier" - remember where the LIMITER is located - up stream from JP36, what you, the viewer are seeing, is the Limiter AMC doing its' job in the loop affecting HOW PEP will even rise, not by much, the radio is thinking it's full tilt back to the Driver and Final - this is not ALC working, it doesn't have such a feature - AMC is working before it gets to this board, nor how AMC would even care...
The Audio distortion and clipping is from the processing AFTER the Clipper diode.
You lose PEP when you run a lower carrier - the LIMITER is set for Full power, the Audio amp is only amplifying what it sees at the Mic. To work, the LIMITER needs to be modified to allow the swing and Peak to even work...AHEMN - remember we put a CAP on the Leads of JP36...
We're forgetting some key pointers...
The above, compare it, is nearly an Exact duplicate of the board, except the "compressor".
But CB Tricks did this up for their own site in early 2000's
Remember the board is now BONDING the Foil and Chassis (Case) grounds together.
IF you own any Sole-Battery powered vehicle Read Non Hybrid or Gas powered - in the near future - better check the Owners manual...the next key up could kill you...