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Margaret doesn't sound American at all to me. I think it's always been more popular in Britain. At any rate, it was *extremely* popular in Scotland in my grandmother's generation. (Because Princess Margaret was the first royal baby to be born north of the border in however long.) It's very seldom used for babies now.

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I like Meg and Peggy as nicknames, but I'm not fond of Margaret at all. I think it sounds harsh, and very dated.