As the circle tightens (radius decreasing), more centripetal force is required to maintain the circle (assume same speed (v) and mass (m) : F = mv**2/r). The centripetal force is provided by lift which is increasing as a result of increasing angle of attack (coming as a result of the pilot pulling the stick back). So if decreasing radius requires increasing lift, someone will stall first. Why this should be the FW and not the Mustang, I can't say. The vigour of stall onset may be the deciding factor.
Isn't the mist thing just condensation occurring in the lower static pressure regions, often seen at high AoA.