The output from the AF amp. Yep! It is over driving. I could lower the AM signal and it would help. Looks like AGC maybe in order? You can download the SPICE model and play with it.
The AER-1A spice schematic
Be aware the model is very slow loading. You can adjust the time to get a quicker response. I'm showing 10 cycles of the AF and started displaying 50 ms into the run. I wanted to let it settle before displaying.