I have the PS/3 version of this item, I pull ten cars, including a 2% grade.
I had to work on the rear truck of mine to get it working properly. Specifically, the small pilot wheels were binding, and they didn't turn smoothly. I finally ended up with some very small shims under the axle screws to allow the wheels to turn freely. I then did a little bending on the spring extension to get the proper tension on the truck. After that, it runs pretty well.
You can't use the larger diaphragms on O36, they will bind.