The 350Z is famous for hard-to-explain faults. It has a separate bias trimpot underneath for the driver tubes and another for the finals. They are famous for burning out.
Since this amplifier does not shut off the tubes' anode current in receive mode, it tends to run hot even if you never key it.
A bias control that's gone bad can cause distortion, and it tends to be worse at the lowest drive levels if the tube gets biased in a way that cuts off the tube current.
Bad news is that this protects the tubes in receive mode. Fixing it so it sounds good again may accelerate an early death if the fix makes it run too hot on standby.
Years ago we did an extensive "rehab" for this model. It included an additional relay to shut off the tubes until you key it. This pic is from a different Palomar model, the 90A. It has this same problem, and gets the same fix.
Relays that will fit the hole pattern in the circuit board are extinct, and adapting it to use new relays that you can buy is a labor-intensive proposition. The High/Low drive-select switch on the rear is a nightmare when it goes bad, and the "overdrive detect" circuit is a part of that problem. The rehab process was extensive and expensive. And even after all that work and expense, the 350Z never delivers the same power as the older 300A model. Never have figured out why.
No easy answers to trouble with this model. The design tried to be all things to all people, but falls flat at nearly every turn.
We shot pics of a rehab process for this one a few years ago just before a hard drive crash. Hadn't been backed up yet that day.
Oops. Haven't tried to make a record of that procedure since.
Just reinforced my opinion of this model as bad luck personified.
73