The instrument voltage regulator is nothing more than a bimetallic strip that makes and breaks the connection between the 12v source and the gauges. It supplies an average 5v (approximately) to the gauges. That is what heats up and cools off, nothing to do with the gauges heating up.
Why did they use that? It's cheap, it works and it is sufficient unto the day. Nothing more. I am sure it was developed in the 50's when they converted to 12v and your other option was a vacuum tube, not optimal at all. remember transistors were barely 10 years from having been invented. By providing the gauges with a run voltage less than 12v you can eliminate the effect of the charging system voltage fluctuations on the gauge readings.
If it sticks closed those gauges will peg and eventually destroy their selves from the heated overload.
