Electrolysis and the Fluctuating Ammeter

What you are describing is not "exactly" electrolysis. Electrolysis is sort of just exactly what it "says", that is, you are creating a battery by means of "dissimilar metals" and an electrolyte, AKA your coolant.

In other words the block, and whatever the radiator is made of, plus the coolant, have become a battery.

That is not exactly what is going on, with what you describe here. What YOU have is a (vehicle) battery / grounding/ charging problem.

Now you very well COULD have electrolysis, as well. But the readings you are getting re: the alternator and starter are purely electrical system.

My first thought is that TOO SMALL battery main ground along with poor engine to body grounds

However, your readings CERTAINLY are something to think about. There is no doubt that "twitchy alternator" could cause damage as you describe.