Some thoughts :)IMD measurements on the receiving end should be considered relative and even propagation might do funny things to the readings such as doppler shifting or distortion from multipath or the stability of the TX rig is not super accurate..
Think about this If you are using 1 watt or using 500 watts, If you have garbage going in you have garbage coming out with audio harmonics, flat topped audio signal producing a rich harmonic signals. Consider the sound card itself, is it a sound card with 10% THD vs. a card with 1% THD. Then to compound it even more consider the rig and the PA in it. If this PA is not linear then it can produce even more distortions especially when you have a accurate ALC meter and it is telling you the ALC is engaging meaning the audio is too high and the ALC is kicking in to keep the level down.
Then consider any other noises you do not want to send with the signal such as ground loops and/or RFI noise.
Anytime you up the power the potential of RFI increases, also weak sidebands will start to show up out of the noise. If you do have a probably in the first place, if you lower the power all you are doing most of the time is just hiding the problem in the noise(or getting rid of RFI). If you power meter does not look real relaxed on a PEP meter, that might indicate you are over driving the rig as well.
On the receiving end of things if you have a radio that does not have tight filtering then the RX is forced to receive everyone in the pass band and the lack of quality of the RX could even produce some more IMD to the RX on top of what was there before (one tone vs many).
If the audio is too high with a crummy 1 watt 10%THD audio amp then you are producing even more IMD.
Do not confuse someone with a huge signal (strong) that is making your AGC to go wild as being wide. That just means the AGC is trying to do its job, The AGC was not designed to receive multiples of signals at the same time.