Brushes are shorted to ground.

When you state "continuity to ground", please state the readings. If >100 ohms measured, I wouldn't worry much since that could just be carbon dust and such. A true short would be <10 ohm. It could have been in the insulators which secure each brush to the aluminum case. For those with the earlier boxy mechanical Vreg (~1971 and earlier), one brush should be shorted to ground. Indeed, there is only one field wire from Vreg to alternator, so ignore the diagnostics discussed here.