A lot of what you are saying here is true if you think of the coil as being stationary over targets of varying target strengths, but your explanation doesn't take into account the fact that targets are detected in a timed sequence as the coil sweeps across the ground kind of like the coil is stationary and the targets are moving under it like a conveyor belt. When you think of it in that context, faster recovery speed certainly does improve adjacent target unmasking because it completes the previous target's processing in time to pickup the next target that is passing under coil. Or another way to look at it, the faster recovery speed enables you to resolve targets that are much closer together on the "conveyor belt" or on a conveyor belt that is moving faster (coil sweep speed). Whether the target signal is strong or weak does not affect how quickly it takes to process the target signal or what the machine "decides" to process, it simply processes the targets in first come, first served sequence as it encounters them during the coil sweep. But you are absolutely right that weaker, small or deep target signals may get truncated and become harder to pick up at higher recovery speeds, thus in effect, reducing detection depth.
