I think that we heard Jerry clip his Mac, at least a little, nearly every time he picked a strong note. I think that that's where he found his sound. Jerry's tone was so crisp and bright and full of overtones that most of the time we didn't hear the Mac's distortion artifacts, but instead we just heard the fat presence of the notes he picked or the chords he strummed. If you look at the audio waveform of a picked guitar, you can see that the initial attack creates a visible spike that's many, many times higher in voltage than the sound that follows. For the actual note to be loud and full, that means that the pick transient would have risen far above the power limits of the amplifier. This peak limiting or "leveling" allowed Jerry to make the audible notes very big and clear and full since the spikey transients were shaved off and when they were shaved off, the output transistors created a brief little "squirt" of mild distortion. The VI Limiter (aka Sentry Monitor) naturally activates right where the output transistors are beginning to distort. Also, fast peak limiting in and of itself creates amplitude distortion and likely a bit of harmonic distortion as well. To most ears, this action still sounded like Jerry's "clean" sound. It's not a grunge to speak of, but much more of a dynamic characteristic. Anyone who has played dead clean thru a Mac at power levels well below maximum can hear that it's just not the same as when pushed to the limit. Same goes for a tube amp. Playing clean thru an overpowered tube amp sounds thin and plinky and the pick attacks are spikey. For that reason guitar players will find an amp that they can drive and clip because that's where the smoothing and sustain comes from. Jerry had a round and bubbly "pop" to his notes and strums and the spikey icepick factor simply wasn't there. He used the Mac much like others use a tube amp in that he drove it into that peak/clipping/limiting territory for this smoothing factor, the loud presence, and the ability to dig into a lick and have it sit there on top. Play too cleanly thru a rig and the guitar sounds thin and wimpy. The Mac let Jerry play as if it was a tube amp being pushed, but the Mac-factor made what came out sound far cleaner and more sparkly than a tube amp. A clipped tube amp becomes warm and dark, but Jerry had the clear slice to his sound.
I have a stand-alone Power Guard limiter here, and while it's a very cool limiter, it's very clean and has the rounded sound of a limiter. I'd assume that a Power Guard equipped Mac would have its threshold set so that the Power Guard would activate first. That's kind of why they introduced it. But I agree that the clean-ness of the Power Guard would rob the Mac of that grittier, nastier, more musical Jerry type peak limiting.
While I believe Jerry had the VI Limiter active constantly, that doesn't mean that all of the sound was in the grungy zone. It means that only the peaks of the signal crossed into that range, while most of the audio lived cleanly below it. But it's this shaving (rounding, smoothing) of the peaks that added that bit of grit and mostly enabled the actual notes to sit loudly on top of the music.
There are clearly those more rare moments when Jerry was pushing the Mac so hard that nearly everything sounded grungy, but I'm arguing that the bulk of the time when he was playing what sounded "clean", it really was more complex than that. There was a LOT of activity in that Mac's limiter circuit and a good amount of transistor distortion happening when the guitar signal transients rose above the power threshold. I hear it in the fingerpicked Peggy-O riff, Althea, Scarlet intro chords, Franklins chords, China-Cat intro, Bird Song riff, Sugaree riff, Standin on the Moon chords, ALL clean leads, etc. None of that stuff was actually "clean". It may have sounded clear and defined, but much of that gleaming beauty came from some somewhat gnarly abuse of the Mac and speakers.
Sitting with a guitar at low volume in a mellow setting, it's not hard to get something very closely resembling Jerry's sound, but on a stage with a loud as shit band, cymbals banging, that stuff just doesn't pop thru. It takes some real power and all this limiting stuff we're talking about to make clean electric guitar cut thru the noise and sit on top like it did.
... and it's just like any other day that's ever been...