Is there an incorrect use of "infer" in "Absalom, Absalom!"?

Solution 1:

The usage of infer meaning imply is actually quite venerable. Dictionary.com has some notes on the subject:

Usage note Infer has been used to mean “to hint or suggest” since the 16th century by speakers and writers of unquestioned ability and eminence: The next speaker criticized the proposal, inferring that it was made solely to embarrass the government. Despite its long history, many 20th-century usage guides condemn the use, maintaining that the proper word for the intended sense is imply and that to use infer is to lose a valuable distinction between the two words. Although the claimed distinction has probably existed chiefly in the pronouncements of usage guides, and although the use of infer to mean “to suggest” usually produces no ambiguity, the distinction too has a long history and is widely observed by many speakers and writers.

You have understood the example correctly in that infer means imply here, but the usage is not standard. I personally would rather stay mainstream and use imply, so as not to pick any fights, but I would also not go so far as to pronounce that usage of infer incorrect.

I would therefore pick option 4: You've understood the meaning correctly, the usage is nonstandard, but not an error, and it is somewhat distinguished, if only by time.