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That would appear to be normal operation. Volume is a misnomer here...It really is an RF input level control....As such capacitive and inductive qualities of the part will allow some RF leakage past it. Any missing shields in the set may render the control inoperable and leave you with a fixed volume output.
In all my TRF sets with 'volume' as a front end RF level adjustment the muting position or lack thereof depends on the strength of the station...Often the controls don't have a very linear response either....There was a reason later sets moved the 'volume' knob to the audio section.
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