Isolation means in a booth with you in the control room. When the amp is in the room with you you don't hear the pick transient distorting for a variety of reasons, the most important being that you are not listening the same way a mic hears the speaker. You are typically off-axis and not two inches away from the cone.I'm not sure exactly what you mean by 'isolation'. If you mean like in a booth with me in a control room, then no. I just had the amps about three feet away from me, with me sitting on the floor in front of them.
If this is the problem, why not with higher-output pickups? Why does reducing brightness reduce it? You'd think clipping is clipping, and since low frequencies require more energy to cleanly reproduce, they'd clip first?
High output pickups have less high frequency response. Clipping is amplitude dependent. A guitar amp boosts high frequencies therefore those clip first.