Dave -- Since I published my original comments about the Fisher phase inverter noose, I have come to work with it more over the past year or so, and can report these additional findings:
1. The stock circuit with the noose in place often does not work well with modern (at least) Russian tubes. The noose causes the tube's operating point to be located right on the edge of producing any reasonable linearity based on the characteristics of the original American piece. While the Russian tubes are very good tubes when operated at any reasonable operating point, their performance at (at least) the lower end of the grid curve seems to move towards cut-off faster than it does in the American pieces, making the performance of the Russian tubes in the Fisher setting quite iffy.
2. I had originally surmised that the noose was an output tube protection measure, but I have now come to believe that that product of the noose is just a desirable by-product. The real issue is that Fisher was trying to maximize the gain of the AF amplifier stage in the power amplifier section, which would automatically increase the NFB and therefore improve performance, and all without increasing parts count. This required using an elevated plate voltage for the AF Amplifier stage -- which -- because it's direct coupled to the inverter -- caused bias problems for the inverter stage. In short, if the plate and cathode resistors of the inverter stage are made small enough to help provide a low output impedance from the stage, then with the high plate voltage direct coupled into the inverter's grid, it cause the inverter grid to actually become positive over the potential of the cathode, producing grossly non-linear operation and distortion.
Enter the noose. It works to carry some of the current load passing through the inverter's cathode resistor, that otherwise the tube would have to pass in full -- but if it did, that wouldn't leave any current flow capability left within the tube to develop an audio output when a signal is applied. By the noose carrying some of the current load then, it allows the inverter section to bias itself normally. But of course, the noose being what it is, in the process of it allowing the inverter stage to bias itself properly, it also acts to very much reduce available output from the inverter as well. So with the noose, it throws the operating point all the way to one end of the scale and the problems that produces. But if you remove the noose, then it throws the operating point all the way to the other end, with the problems that produces as well.
3. The real answer is to remove the noose (restoring adequate drive), partially bypass the cathode resistor of the AF Amplifier stage (to achieve the increased gain level), and power the AF Amplifier stage from a lower B+ voltage source. That will then lower the plate voltage of the stage. This causes the inverter section to reduce its current draw and bias itself normally -- all as was done in my original modification for the 400 receiver. In the 400's bigger brothers however, the overall B+ is slightly higher, meaning that if the noose is removed but the AF Amplifier stage B+ supply is not reduced, then the inverter simply runs out of gas well before full power is reached, causing significantly higher distortion -- and reduced power output.
All of this is the long way of saying that by reducing the B+ to the AF Amplifier stage (by moving it to the next lower voltage tap), it should resolve both problems at once in your 500C: Distortion will definitely go down, and power output will return.
I hope this helps!
Dave