It's been awhile since I looked at this, but the way Mobius feedback works derives from the EDP which has two different feedback controls. Regular feedback is applied while in Play mode (actually any mode that isn't recording) and "alt feedback" can be applied while you are in a recording mode such as Overdub, Multiply, Substitute, etc. It's supposed to only do that if you have alt feedback enabled.
In the Edit Session window, click on a track, select Mixer from the tree, and look at the value for the Alt Feedback Enable checkbox.
When Alt Feedback is disabled (unchecked) the normal Feedback control should apply to all modes. When it is enabled the two are independent.
From what you describe, it sounds like Alt Feedback Enable is on, and the Alt Feedback level is 127 (all the way up).
Out of the box, alt feedback is supposed to be disabled, it's possible it's being forced on internally, you could test this by using the Alt Feedback knob instead of the Feedback knob.
In normal use, Feedback works like it does on any delay. It is reducing the volume of the "repeats" not the volume of the signal you are recording. If you wanted Play mode to never do feedback reduction, and only use feedback during Overdub, then you would need to enable Alt Feedback. Feedback would be all the way up, which would be what Play mode uses, and Alt Feedback would be moving around which is what Overdub would use.