Dimming lights...bright lights...dimming...bright...

I'm just wondering why you grounded the alternator to the voltage regulator?
Alternators are usually grounded to the block and voltage regulators through the body and sometimes a wire is run from 1 of the mounting bolts to the block also. I don't know if connecting the regulator body to the alternator housing would have any effect.
I would check to make sure that the regulator has an effective ground and that the diodes on the alternator are functioning properly, but it sure sounds like a ground problem.