OK, the large disparity between bottom and top should be fixable with the vert. linearity control. Since the lin. and height adjustments are interactive, you'll probably need to juggle both of them several times to get the sweep linear with a bit of overscan at the top and bottom. The vert. hold will probably need resetting as you adjust lin. and height.
The screwiness of the display itself doesn't appear to be from overloading, since reducing signal strength doesn't cure it. It almost looks like the video is negative (phase-inverted). The diode M4 couldn't have gotten connected backwards, could it? The banded (cathode) end should connect to the last IF transformer (L9), and the unbanded end to the junction of coils L10 and L11. The photo you posted earlier shows it connected correctly, so i dunno how it coulda gotten reversed.
Maybe you could post another vid with the VCR, with the signal loose-coupled and the vertical adjustments having been made.