> Pay phones mitigated this in a low tech way - by software muting the handset.
So does this mean that there was a dedicated second microphone hidden somewhere within the payphone body, that would continue to record the sound the coins made?
The coins weren't recorded, it was just a short tone that indicated 5¢. A quarter was five quick tones. A dime two.
I used to mess with the proctor test set (dialing 117 in the US at least on GTE) and only ever convinced it I inserted a nickel even with many tries using a digital recorder or a computer speaker.