Here are pics of a Galaxie for reference. The Comete was identical, except for components and decals.
As Avenan states, the tubes were joined using an interference fit. They were not bonded or welded, at least not initially. However, I believe that the repairs on the 1st recall involved bonding.
The frames were produced in collaboration with Pechiney Cegedeur, who were the world's 4th largest aluminum processor at the time. Their patented process for joining aluminum tubes without bonding or welding had been used with sucess in the aviation industry with success. While Pechiney was obviously involved with the frames, I have been unable to determine if they did the actual manufacturing. Peugeot may have simply licensed their process. I have also not seen any documentaed ex[lantion of the root cause for the failure.
In correspondence with MiamiJim, he had stated that he had never seen a failed frameset. It may a case of Peugeot acting cautiously in the face of a few failures. However, it is interesting that there was a 2nd recall notice, due to the failure of repaired frames. It is possible that the repair process actually resulted in weaker joints.
Ironically, the bolted junction at the top of the seatstays is probably the soundest joint on the frame. Luker need not worry about falling over backwards, as a face plant is more likely.
From a ride perspective, the frames did provide a ride quality very similar to the Vitus. They were relatively flexible but comfortable. The main difference was slower steering, due to a shallower head angle.
40% is probably a reasonable discount given that you have some nice mid-range components and an excellent wheelset, if you decide to put them on a new frame.
Personally, I do not think that I chance riding it. Given what you paid, I 'd be inclined to store the bicycle and buy something new. I'd try to source some decals and restore it. Let's face it, there are probably not many of these around anymore. They should be extremely rare. I'm sure there are Peugeot collectors out there who would pay good money to have a Galaxie. However, if you advertise it, just make sure you give prospective buyers the full story on the reliability issue and state that it is suitable only for display.