Yes.
But decreasing sustain is just a matter of turning the knob down. The resistors not going to effect it on maximum setting at all because there’s zero resistance from lug 3 to 2 on maximum and there’s 100+k resistance to ground and the signal will take the path of least resistance…ie;lug 3 to lug 2.
If you want less sustain on a lower setting you would actually want to reduce the resistor as the lower it gets the more signal passes to ground and if you remove the resistor all together it will ground out and become silent, hence, basically become another volume pot.
I would put a 560 Ohm in it. Much less than this and you will have no distortion at all on zero.
(BTW, I misread your post the first time)
When a certain amount (I’m not sure of the actual percentage) of muff signal goes to ground it starts sounding bad as you would probably know from turning it down. IMO the muff sounds best with the sustain no less then 2 o’clock,it just doesn’t have a very usable sustain control. Its not actually a distortion control BTW,its just a pot between the first input stage which is a clean boost and the first clipping stage.
I’ve always wondered whether it would be better having the sustain pot pre- circuit rather than after stage one. A lot of fuzz pedals have this set up, I’ve never tried it on a muff but I have been meaning to.
The metal muff has a very usable distortion pot,it can be turned to zero and still sound really really good, its very user friendly.