I was told that lugging in a Model A context is defined as (a) low RPM + (b) high gear + (c) throttle and timing combination putting the engine near peak torque. Putting high torque on the pistons and crankshaft at low RPM for an extended time (because you're in high gear) can exceed the ability of the oil layer to keep the moving parts and the bearings separate, causing permanent damage. There's also the possibility of detonation, because the compression stroke is relatively slow for the amount of fuel-air mixture you're trying to combust in each stroke, which increases the chance that the FAM will detonate. That's what I was told anyway.
What this means is that you can avoid lugging despite being in a gear that's "too low" by backing off on throttle or spark advance. You won't get the power you would get if you were in a lower gear, but neither will you damage the engine.