Great news! Looks a nice receiver. I find the TRF TV12 series much more interesting than it's superhet sister. Must admit, I tend to align TRF receivers without a generator relying on the signal itself. Works very well.
The limiter appears to be working correctly. The idea is to limit or eradicate anything over peak white. Ignition interference was a big problem in the days of fringe reception.
This produced large white blobs on the screen whenever an unsuppressed vehicle passed. The limiter was advanced until peak whites were just beginning to be clipped then backed off a small amount. This was the critical operating point and would reduce the size of the 'blobs' considerably.
You may have seen this link filmed in 1952 in the Watford area I believe. This gives some idea, in a light hearted manner of the problems encountered.
http://www.youtube.com/watch?v=0auRh...eature=related
Regards, John.