(Fixed typos on this post)
AGC amp "sees" a signal of carrier and envelope all as one, it's converted to an IF but unamplified from that section, from there it's sent into a full wave detector that uses a bridge (wein) of known reference - the varying audio is smoothed out and summed into the carrier to help keep you from getting blasted out. The Squelch control tap is for this so you can use Squelch and it works properly.
- When you asked about "loud signal blast" I went back to an old Cobra 148 that has a mod in it that uses the R43 AGC out line as a tap point - to go to D15's Banded end - using a 1N4148 and a simple 2.2K Resistor - looking this ACG section over here - reminded me that if nothing else, this mod applied more of the AGC difference signal that goes to the PIN diodes to trim - punch down - the RF signal (Strong adjacent) I think this was an OEM install - not a "Tech" mod.
Key parts are that bridge, if unbalanced, will not merge the carrier and audio detected in it, properly to "compress" the audio envelope so you don't get blasted by a wildly swinging radio.
When you don't have a carrier, extra signal is needed - that is where L14 in SSB modes comes into play.
@sp5it - is correct, that D68 sends power to the PIN diode section to help limit the input signal and prevent overload. Not guarantees it's foolproof, but limiting the input goes a long way. Timing is done thru those Electrolytic caps - too small it sounds monotones-ish, too large, you have an overload issue - can't keep up.
This is more of an end user event, because you can't prevent the locals from ruining your day - so some small tweaks to the Bridge caps can help - but it makes the radio deaf in some ways, or too sensitive if you use the wrong values. So the end user has to make the choice of what is acceptable to them - else it's best to get a good tune up and leave it alone.