I think they used the common mod of wrapping insulation tape around the bottom of the bar to prevent it going fully in the socket, that way you have more dip. Of course a far better mod is to bend the bar at the point it is a right angle in a vice.
As far Shields saying it was not performed using a bar leaves only a few more options: 1/ an effect or 2/ using the hand to slow the recording reel (old method) at regular intervals. Which could obviously only be done in the studio.
I saw them live just after 'Loveless' but i could'nt pick much out as they sounded like a wall of noise.
One thing about MBV i hate is their contrived mystique, everything about them is like a national secret. They never printed lyrics and they where always cagey about technique, tunings and effects. I like their music but they have to be one of the most pretentious bands that has ever existed.