Okay... Pulse Width Modulation...
This works by pulsing the 12V to the motor on and off very quickly. The longer the pluse with, the longer 12V is applied, and thus the higher the average voltage.
Frequency = 1/Period
Voltage = Current * Resistance : Current = Voltage / Resistance
Power = Voltage * Current
You can think of a circiut as if the wires were pipes and the electrons were water:
-Voltage is the WATER PRESSURE
-Current is the AMOUNT OF WATER
-Resistance is the SIZE OF THE PIPE
You are right in saying the that speed controller only controls the voltage. This is true. Current doesn't depend on torque, however. *Torque* is a function of *Current*. That is, more current will increse motor torque, while more voltage will increase motor speed. KEEP IN MIND, though, that current, voltage, and resistance are all related! You are also correct in saying that measuring the current will give you a good idea of the torque produced by the motor. The reisistance of the motor should be relatively fixed (borrowing things like heat), so if you monitor current you can also find voltage. You can use this information to look up in the spec sheets for the motor the amount of torque being produced. On the other hand, your firend is right that increasing the voltage causes the current to go up. The motor does act as a resistor... BUT...
...Inductance...
The motor isn't *exactly* like a resistor. Instead, it acts like an inductor because that's what it is. An inductor is a coil of wire usually wrapped around some kind of ferrous metal. Inductors store energy in the form of magnetic fields (EMF). Do inductors conduct perfectly, though? No... they limit current as well... but instead of it being called *resistance*... it is called *REACTANCE*.
Reactance (Inductor) = 2 * (Pi) * Frequency * Inductance
Why does this matter? It is important because the Reactance of the motor *WILL CHANGE* when frequency changes. Does the speed controller change the frequency? *No*. Remember that frequency is based on peroid. The peroid remains constant, while the width of the pulse changes. What does all of this mean? Grab the spec for the Victor 883, and look at the frequency it modulates at. Look at the spec sheet for the motor, and look up it's inductance. From here you can calculate what the "resistance" of the motor will be on the robot. Then you can make a graph of Current VS Voltage through the motor.
The end result is that your friend is "right." I hope that helps clear things up...
Edit: GAR! Getting ASCII art to not be mangled is annoyingly difficult!