Matthew,
That’s correct, you shouldn’t notice any of this weirdness when using the VPM-1 as an expression pedal because it uses different circuitry for that function.
I did have some time the other day to play around with this distortion issue. I placed 10uF capacitor across the LEDs of both optocouplers and it seemed to fix the problem. That was just the only value of caps I had laying around, so it may not need such a high value, but it did seem to work. Theoretically, the bigger the cap, the longer it will take for the sound to decay when you turn the volume off in the heal down position (it works somewhat like a sample and hold circuit). But practically, even 10uF didn’t cause any noticeable delay at reasonable volume levels.
If you do this mod, you just need to be mindful that the square pads are at 5V while the round pads are close to ground potential…so if you use polarized electrolytic caps, make sure the positive lead is on the square pad. You probably could use 0805 sized surface mount MLCC (multilayer ceramic caps) that would fit directly between the leads…and they are not polarized, so their direction doesn’t matter.
-Brach