Gib, my understanding is that a fried output will open the corresponding Rail Fuse, and possibly invoke the protection circuit. Did you ever actually blow and replace the speaker fuses?
You are correct, this formula is found on Page 5 of the updated Phase Linear 700 700B Service Manual dated 2/81.
So if your 8 Ohm speakers are rated for 200 Watts, that is equal to 6.25. And the square root of 6.25 is 2.5, so 2.5 Amp Fast Blow Fuse.
For Lee, because his speakers are rated for 1,250 Watts, he will need an 8.8 Amp Fuse, closest actual Fuse is 10 Amps!