Isn't this how the draft control is supposed to work? The lift arms will try to drop as long as there is no draft force and the draft control is 'engaged'. A draft force will enable the draft control to try and raise the lift arms until draft forces are lessened. If you move the draft control lever to the other position (off), do the lift arms still drop?
Also, one more thought....I'm not completely sure of the specifics of your tractor, but the older tractors had a draft control that was purely mechanical - usually a large spring was located behind the seat and connected somehow with the top link. Has this possibly been removed or altered, affecting the operation of the draft control? Just a thought.