Glad to hear you are giving the all metal mode a chance! I've been detecting for over 35 years, and this is the first detector that I've owned where I actually preferred the all metal mode over a discrimination mode. I attribute that to the fast response and variable audio tones.
I know you asked for the experts to answer your question. But while we are waiting for some of them, let me take a crack at it. Short answer....YES! And that problem is called target masking. The simplest comparison between the sounds of all metal and the sounds (or lackof sound) in a Pattern mode is to think about what the detector is actually doing. When you are hunting in all metal, none of the notch segments are being rejected. It makes an audible tone for each ferrous or non-ferrous target you pass the coil over. When you switch to a Pattern mode and have some of the notch segments set to reject specific ferrous or non-ferrous targets, instead of hearing an audible tone representing that notch segment as in all metal, you get silence. I usually refer to that as a nulling effect. In your words, the threshold will cut out. Regardless of what we call it. It happens with all detectors running discrimination. As to whether or not the X-Terra will eliminate an accepted target that is adjacent to a rejected target.....possibly! Whether it does or not depends on the size of the targets, the distance between the targets, the direction you sweep over the area in relation to the location of the targets, sweep speed, target depth, coil design and size, and the skills of the operator. Even though the X-Terra resets between targets as quickly as any detector I have owned (and quicker than most), there is still the chance that the nulled audio of a rejected target will over power the tone produced by an adjacent accepted target. Again, sweep speed has a lot to do with that. Being a fast sweeper, that is one of the reasons I choose to hunt in all metal with variable tones. Some may say that the low tone of iron will still over-ride the medium high tone produced by an adjacent silver dime. But I am convinced that I am better able to hear the two tones produced by the two targets better than I am able to hear one tone being "over-ridden" by a nulling or blanking of sound. When I hear a mixed audio response, I simply resweep the area from a variety of directions, in an effort to separate the multiple targets. I will add that the 6-inch DD coil has been very impressive in target separation as well as depth. JMHO HH Randy