How do you figure that this is nonsense? Typically, SWL radios would have
their S-Meter calibrated at 14MHz, so that S9 would equal 50uV. You are
correct when you mention S-Meters that are calibrated in dBm as being
absolute, as long as the system in in calibration for gain distribution,
etc. Receivers that have this function do provide for setting up the gain
distribution.
Now, the mystery continues.................what exactly do you mean by the
following statement?

"The RF gain control just sets maximum sensitivity of the radio and does
not change the gain of the radio so by turning all the way down you are
at the radios published maximum sensitivity. As you turn it up you are
desensitizing the radio."

The above statement, in quotes, is a new one to me. Could be showing my
young 54 year old age. The RF gain control only sets the maximum sensitivity
of the radio when it is controlling the bias to the RF stage in addition to
the I.F. stages, and this usually isn't the case, except for some of the
older tubed equipment.
Most RF gain controls USUALLY only set the gain of the I.F. stage. This has
nothing to do with the sensitivity of the system, if we are talking about
noise figure (I realize that you didn't mention that, so I won't put words
in you mouth on this one).
When you turn up the RF gain control, you don't desense the radio, but you
do give the AGC loop more gain. Maybe this is what you meant.

Pete