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basically a limiter doesn't just chop off the top of a wave like you are experiencing when you normalise it. here is a nutshell guide to how a limiter will work (not too precise but i think you should get the hang of it):
find a loud part of the track and zoom in quite a lot on it (so you can see 1 beat very close up, approx 200ms in view) and have a look at how spikey the mofo is, make sure the scale on the right hand side is in dB. the lines going accross the wave will show you what level things go to in relation to the scale on the right, you will notice the wave swinging either side of -?‡dB. you need to make sure you don't limit too much at a time so always limit the 'top' of the spikes off. for example, i have a spike in a loud part of the track which peaks at -1dB, and the 'main' part of the waveform runs between -3dB, through -?‡dB and down to -3db on the other side. so if i limit the wave to -3dB (make sure you select the entire track before actually limiting it) then it will have a very similar (if not exact) physical volume as before the limit, minus the spikes.
if you are aiming to reduce the amplitude (gain) of the track then just limit it to a value which doesn't cut out the middle of the wave, so if you have a track peaking at 0dB just limit it to -1dB or -2dB, all the important non spikey guts of the tune will be within those boundaries.
to use the limiter in cool edit, select your entire waveform, go to effects>amplitude>hard limiting and your limiter will pop up. when i limit stuff, i generally use the following settings:
limit max amplitude to: whatever level you limiting to
boost input by: 0 (you can use this to master tracks, to give them loudness)
look ahead time: 7ms
release time: 100ms
you're right, it is a bitch to explain! 
and remember, if you can't be arsed with the limiter, just use the 'amplify' tool with a negative percentage. it does a similar job and is much less comlicated 
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MUGGETS
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