One thing I've heard, but never experienced personally, is that if you connect the regulator to power before it's grounded, it will fry the regulator in short order. Instantly like...
This has happened several times to members with Early Broncos, and they're wired the same way as the rest other than the ammeter circuit.
But as important as it being grounded to the body, the small ground wire between the alternator and regulator mount gives them the same ground potential and effects efficiency. I don't think it stops it from charging, just not as accurately. But I don't pretend to understand all that either.

I really don't think your issue sounds like a lack of grounding for the alternator case, but it never hurts to make sure. Most of them live long and fruitful lives just bolted to a rusty engine block, as long as the ground wire between the engine and battery is sound.
New paint added to a rusty threaded hole and bolt could certainly reduce that, so again it never hurts to be clean metal, or add a ground of your own.

Paul

 

Thanks again Paul, I cant remember if I plugged in the regulator off the body or not but I'll grab another one just in case. And I didnt think to look at the mounting surface on the alt bracket when I slapped it on there but that'll be inspected next. The old alternator has a short wire hanging off the ground but I had no clue where it went but, it makes sense that it would go to the regulator mount, thanks for the info.