It certainly could be a peak detect issue as you suggest.
Some further details:
In AC, while measuring frequency, the voltage is displayed correctly, but the frequency is not always.
Additionally, the unit is not able to calculate crest factor; always reading ‘over’.
With a low voltage input (<2VAC @60Hz), the readings are correct. From 2VAC to ~80VAC K500 begins cycling at 2Hz, four pulses at a time, then rest for equal period. The displayed frequency is 2Hz as well.
Above 80VAC, the meter reads correctly.
I can see that REL4 goes high through this period, and U503 (HC123) provides the 2Hz pulses.
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Aside, I did change out U534 (AD711 or LF351 depending on how old the unit is) as I could see an incoming sawtooth on pin 3 but nothing leaving the follower. This made no change.
Time to acquire more parts and keep probing.
EDIT: I will qualify that the above test was performed with a variable transformer. I just checked with a HP33120A function generator set to 7VAC @ 60Hz, and the 2001 reads correctly, less the crest factor.