What can happen with the am/vm switch is that it can develop a slightly charred set of contacts internally, yet still make a connection. That slight char creates a tiny resistance. Current across that tiny resistance creates a voltage. That voltage plus the normal voltage generated by the current sensor is enough to tell the generator it is in overload and drop the load as one is increasing the load.
I fought that problem for some time.... 16 amps was the most I could get before a load drop. I found it when i measured the voltage across two terminals on the am/vm switch that were supposed to be connected together and got voltage across what should have been a dead short.
Replaced the switch and it works fine.
I never would have thought that the am/vm switch would cause a faux overload, but it makes sense if a high-resistance contact on the switch adds voltage to the overload sensing circuits. Overload circuit is just doing what it should.
If exercising the switch "cures" the problem, rest assured that it will be back.
Note that Steel Soldiers member "kloppk " pointed me in the right direction with a good block diagram of the am/vm switch.