Howdy Douglas...In your post, the one thing that jumped out at me was
your statement "But then, whether I was keying or not, the needle slowly
started to rise, slow at first, then faster and faster until it pegged
and then the lights on the radio flickered quickly and the room lights
dimmed, the rig making the arcing noise again". This more sounds like
a bias problem, and would be a typical sort of problem I've seen in rigs
of the era whereby the bias voltage to cutoff the tube during receive
starts to fail causing the tube to conduct.....more conduction=more heat
and it degenerates into the sort of symptoms you've described. Typical
things could be shorted screen or cathode bypass capacitors or even a
bad zener diode used to regulate screen voltage (the rig escapes me at
the moment). Check in your manual (hopefully) to see what the idling
current should be.....if set high, for example this could aggravate the
problem. It's been at least 10 years since I stuck my head inside a 520
so circuit details don't come to mind to help further. Best of luck.

73 - Gord VE1AJF