I was recently restoring an old Stromberg-Carlson AM radio and after completing all repairs and alignment I found that some stations were totally garbled sounding like an overdriven speaker. Because the speaker was not original I figured it must be the culprit. It measured 2.9 ohms across the terminals. The original speaker should be 3.2 ohms. So I took a 1 ohm 1/2 watt resistor and placed it in series with the speaker and all works perfectly now. But I don't know why. Could someone explain why this worked or why it was garbled?

It measured 2.9 ohms across the terminals. The original speaker should be 3.2 ohms.

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That's just about right.
To get the actual or approximate ohms reading of the voice coil winding...you multiply by your meter's ohm reading by a factor of 1.25 = 3.6 ohms in your case... which is quite close to 4 ohms.

Go here to this link for a wonderful explanation.
Read and re-read it..
It is a GREAT bit of teaching info in a couple paragraphs:
http://www.radioremembered.org/outimp.htm