Distinct from the volume knob?
It could be that rather than completely disabling AGC, it switches to milder compression.
Another idea is that while tuning, we can delay the volume recovery of AGC. In other words, the same fast compression attack, but very slow release, so that as the user tunes across the center of the band, they can still feel the volume swell.
A simple voltage divider could be introduced when AGC is turned off to attenuate the overall volume, so that the loudest blast is not that loud.
If manual AGC and volume should be different controls depends on gain distribution across stages in the receiver. In superheterodyne AM receivers, most designs will need both to get best performance.