Hey Dave;
Maybe this will help.
As you know I don't own a REAL Fairchild, but I do have the ADL 670 version.
Which is supposed to be a clone.
Anyhow, recently I was working with a producer in my joint, who wanted to use the 670 in Lat/Vert mode.
We switched the unit over, and noticed a distortion that wasn't audible in the stereo mode?
Tried a few different things, reducing input gain, different source material, release times, etc, etc, etc...
Always with the same result...
So in the end, we used it in the Stereo mode and moved on.
So the next day I called Anthony DeMaria to come over and take a look.
He brought his scope,a box of original new tubes, checked them and changed all the tubes, even in the power supply....!
(let me tell ya at this point I began to sweat!.....$$$$$)
But, (thankfully for me) the same thing happened.
So I had him take the unit with him for further testing.
Long story short, he took the 670 over to Ken McKims shop and the two of them tried to figure this out.
After a day or two, and still no idea what was going on or why, Anthony rented an original Fairchild from one of the rental places in NYC. This unit had just been checked and calibrated so it was supposed to be up to spec.
Within a few minutes of them using this unit along side the ADL 670, they noticed that the original Fairchild did the same thing, and exhibited the very same type of distortion artifacts that my ADL did.
At this point they figured it was one of those quirks that the Fairchild is know for.
So after a few days of comparison testing, Tony brought the unit back to me.
When I asked him, what was the problem he said, heck if I know, I didn't design the damn thing, I just copied it~!
So I guess your unit is operating correctly