Alright, I pulled out the old manual. I had it mostly right.
With the switch in arm, the "arming phase is completed only when both power levers are advanced above 90% N1 and engine torque is above 1000ft-lbs. When armed, the green L and R AUTOFEATHER and L and R AFX annunciators are illuminated. The AFX DISABLE annunciator [caution light that triggers master caution flasher] annunciator is extinguished. The afx system will be inoperative on either engine as long as its power lever is retarded below 90% NL."
"The autofeather system is required to be armed and operable for flight during takeoff, climb, approach, and landing, and should be turned off in cruise. When the system is armed, if torque meter oil pressure on either engine drops below 350 ft-lbs., oil is dumped from the dome, the feathering spring starts the blades toward feather, and the afx system of the other engine is disarmed..."
That's all the more specific it gets, but we were told that it should be shut off 1) because when it's on you stand a pretty good chance of getting a master caution flasher every time you adjust power through that magic 1000 ft-lb point, and 2) large power changes that aren't perfectly even run the risk of causing the AFX system to operating, causing engine surges and unscheduled feathering. Mostly we shut it off because that's what the checklist says, and it causes a lot of nuisance lights. I think Lance is right, and Dave, I wouldn't be surprised if there's a cost savings to limiting the wear on the sensors, too.
As a bit of trivia: AFX is not armed for landing in the Q, so a go-around with an engine failure results in a negative-auto-feather takeoff condition. It's a real PITA.
