It seems like the greying goes away if I use a larger type (I specified text by height, at 10") and the drawing was printed at 1/8" = 1' scale.  Text would then be a little less than 1/8" high. 

It seems that Layout creates a raster image of the drawing.  If I zoom in on the text it is completely illegible with only a few pixels where the text should be.

That seems a very problematic result.