Your still running a mechanical regulator, some what the nature of the beast is it is an on/off type regulator.
There is an electronic version of that regulator that is smoother.
I do have a 67-68 service manual on these trucks and for "Excessive Ammeter Fluctuation" it says "High resistance in the field circuit to the alternator or an improperly set voltage regulator" which doesn't prove true in my case since the charging system works perfectly fine when I connect the regulator to the battery directly.
The above statement is irrelevant. It might work ok hooked to the battery but that is not how it is designed to work. It needs to be adjusted to work as designed, which is what the manual is telling you. I bet if you put a meter to the regulator power connection you'd see that the voltage is different than at the battery. Which is part of the issue, it should be within 0.1v and I bet it isn't.
