Before HO, I had Gilbert American Flyer.. But I don't remember the transformer I had, nor the track plan..I say 'transformer' because I think it was AC, not DC.
So my questions are these: If Flyer is/was AC (1) Why did Lionel AC have 3 rails (I know middle rail is the common) but Flyer used 2 rail ? (2) And since Flyer is 2 rail, are/were reverse loops a no-no, where 3 rail allows reverse loops anywhere ? What's going on here ?.....
I'm not a tinplate expert, so others may have to correct me.
That said, most American Flyer trains were AC, and like Lionel, they change direction using a "reversing unit". When you cycle the power, it changes the direction. However, they apparently have "universal" electric motors that will also operate on DC. The catch is that if you do run them on AC, unless you make a minor modification, they won't change direction. Typically most folks just run them on AC.
As for the 3 rails, 2 rails thing? Well, you've pretty much answered your own question. 3 rails makes wiring simple. Reverse loops are cool, and quite a few of the standard Lionel track plans have them.
Take this old standby for example:
Build that with a 3 rail sytem (Lionel or Marklin for example) and no problem. Build it in a two rail system? Better get ready for some fancy wiring.
Lionel was first and foremost, a toy train. Run it on the carpet or under the Christmas tree. Designed for "plug and play" simplicity.
So why go with two rails? That's simple too! Real trains only have two rails. 3 rails looks like a toy train!
As for reverse loops in American Flyer, they'd probably have to be wired the same as they are on an HO set. Even if you assume that there's no "polarity" since it's A/C, when the engine bridges the insulated joint at the edge of the reverse loop, you're going to have a short circuit.