Jazzius,
> it distorts when the L2 wouldn't at the same depth of limiting <
Again, PeakSlammer is not a limiter, and it doesn't perform "gain reduction" in the same sense that a limiter does.
With a limiter, if you set the attack infinitely fast and the release very slow, then you won't hear it working at all because the volume is reduced instantly and stays constant. It's like a person manually turned down the volume once and left it down.
PeakSlammer is completely different, and it manipulates sections of the waveform. If it changes the gain too much you will get nonlinearites at the transition points between where it reduces and where it doesn't. Or where it reduces much more than where it reduces less.
--Ethan