The floppy drive could read/write high density 1.76MB disks. I know, I had one. You're right that the Paula chip wasn't upgraded to handle double the data rate

The floppy drive could read/write high density 1.76MB disks. I know, I had one. You're right that the Paula chip wasn't upgraded to handle double the data rate from the drive. The solution instead was that the disk span at half the speed.