Lol, well I had to reread much more than the first few paragraphs, but indeed, I think I see the resolution to my confusion:
The outer rails and the earth ground wire are not two separate entities, but instead form the two halves of a dipole antenna. At the same time, the outer rails are doing double duty as the ground plane for the locomotive.
The whole setup is like if you had a dipole antenna transmitting to an AM radio in an automobile (which has its metal body insulated from earth ground by the rubber tires), except that to make this analogy accurate, you would need to connect a jumper cable from the car body to one side of the dipole antenna.
I guess another consequence of this is that the voltage difference between the outer rails and earth ground is cycling thousands of times per second if you have TMCC hooked up, whereas it would be constant or 0 if you were running in conventional control.
Does this sound right?
Thank you John and Chuck!
