It is not fed into the diode demodulator, but instead amplified as AF audio by the IF strip, with the transformers Z1 and Z2 being used as interstage coupling transformers. The local oscillator is disabled when playing the phono side, instead being used to bias the 7A8 as audio amplifier. After a single stage of audio amplification, probably also with the transformers providing the record de emphasis, the audio is fed direct to the volume control, with the 7C6 likely being used to provide a small amount of negative feedback to control gain and improve linearity, also likely doing more de emphasis to get a better approximation of the RIAA curve, and driving the 35L6GT power amplifier tube.