This might be the regulator, but is probably NOT
It is most probably VOLTAGE DROP in either the ground circuit or the ignition harness
To test this, do the following
Turn the key to "run" with engine off. If you have points igniton, you want them CLOSED. Put your meter on coil - (neg) terminal. IF you read close to battery voltage, the points are open. Bump the engine until This voltage goes very low
Now put one probe of your meter on the regulator IGN terminal, and the other probe on the battery positive post
You are looking for a VERY low voltage. If you read more than .2-.3V (two TENTHS of a volt) look for the cause of the problem. Your suspects are a bad connection in the bulkhead connector, the ignition switch connector, or the switch itself.
Next, start the car, on fast idle, and allow the engine and regulator to warm up. Wait for the battery to charge to "normal" IE ammeter centered, or as close as it gets.
Stick one probe on the battery NEG post, the other probe directly onto the regulator mounting flange. Once again, you are looking for no more than .2V. Any more indicates a poor ground between the battery, the engine, the body, and the regulator.
You can add an additional ground wire from the battery to the regulator mounting bolt, and to TEST the hot side, you can temporarily add a wire from the regulator IGN terminal direct to the battery. ONLY use this for testing.
If either / both of these do NOT cure the surging problem, replace the regulator. Buy a good quality regulator. Standard Motor products VR-128 is one
Please READ this article by MAD electrical, which details some of the problems with old Mopars, the ammeter circuit, and the bulkhead connector:
http://www.madelectrical.com/electricaltech/amp-gauges.shtml
came from here:
http://www.madelectrical.com/
Go down the page and examine the simplified diagram. They do a fair job of explaining the problems in that circuit.
MUCH of the reason that your lights dim at low idle speed, is that the older model Mopar alternators simply do not "jump in" at low RPM, nor do they output much. The newer "squareback" design is better, many of here have gone to more modern "Denso" alternators which seem to output more at lower RPM.