A couple of thoughts here... the chopped wave will get you more smoke, brighter lights, and better slow-speed performance. Think about driving a nail into a piece of wood with a series of hammer blows, vs. "pushing" it into the wood with steady pressure from a heavy weight.
I run a Postwar 2018 and an MPC-era 8042 2-4-2 on our Christmas loop. True they are quieter on a 1033. (A lot of the buzzing comes from the E-unit.) But they will start smoother, and run at slower speeds when being run from the chopped-wave transformer that came with our 1995 K-Line set. And you can blow the whistle with less slow-down. We once looked at the K-Line transformer's wave form on an oscilloscope. It is very aggressive, perhaps as much as 50V peak-to-peak. I've also seen the chopped waveform from a Lionel Powermaster on a 'scope. It's aggressive, but not as much so as the K-Line.
Think about the folks who are likely to run trains with their ZW handles... My guess is that Lionel left it this way on purpose to wring more performance out of Postwar, Postwar Celebration, Conventional Classics, etc. And in my experience the chopped wave does give better performance.
If the peaks of the chopped waveform are too sharp and the noise is objectionable, you can "round them off" by placing a NON-POLAR capacitor across (in parallel with) the output. DO NOT use a polarized capacitor with AC! For maximum safety, even the non-polar capacitor should be in a ventilated metal enclosure. I would try about 150uF to start, and adjust from there. 200uF would be smoother, 100uF would preserve some of the ripple. Season to taste.
