Hi Archer,
At 0% Loading, the palette knife should be giving the same result as the old palette knife without the loading functionality ( the dial just adds varying amounts of loading to the tool at values above 0% ), it doesn't add its own paint but should smear it based on what level of paint volume is detected, or smudge it if it is a seen as dry media ( this is effectively unlimited if you keep smudging ) due to low paint volume on the canvas.
If you're using fairly heavily thinned paint, this will tend to be seen as dry media of its original chosen colour by the palette knife, it can't preserve the translucency due to high thinners in the media it smudges. I wonder if that might be what you're seeing there.
If that doesn't seem to be relevant to what is happening or you, could you possibly post a screenshot of what you're seeing if it's possible to demonstrate in this way?
Dave
Resident Bug-Hunter
Ambient Design