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It's a square channel, not the triangle. Triangle is bass.
The original song turned ended the panflute note two rows before the next note, and also had a second channel play a quieter echo version of the flute as well. So I played a quieter version of the current note at a lower volume two rows before the note ends, this ends up sounding like the volume decreases, and also kinds provides somewhat of an echo.
The volume curve on the NES panflute ramps up for 7 frames before settling at a plateau, then 5 frames later, curves down for 4 frames, then finally stays there. I think it's the ramp up attack on the flute that gives it the cool sound.
I'll attach the FTM file for anyone who wants it.
I think Famitracker 3.5 alpha has messed up tuning on high square waves compared to the previous version.