Thanks StarTech - Here are the results:
(2) With the engine running full throttle, I checked the voltage across the two outside connectors of the Stator (both AC voltage) and my numbers ranged from 42 V-38V down to about 5 volts. The number changed as the engine surged (slow down the voltage dropped).
(3A) With the engine off/key off, i checked the resistance between the same two stator leads. I was getting 2 ohms, which I believe is ok because I would change the multimeter setting and it kept showing 2 (different decimal place). So I believe it is ok. Again, brand new stator installed.
(3B) With the engine off/key off, I tested each stator lead directly to the battery negative terminal. Infinity so no short.
I also tested DC voltage across the battery while reving the engine with throttle controls. I saw no immediate increase in voltage at all above 12.5v.
The Voltage Regulator has no terminal or built-in terminal for a ground wire. This particular VR connects to a metal piece that is under the black plastic top cover that bolts onto the engine. On other Kohler models, the VR connects to that plastic cover where a ground wire would for sure be needed. I saw that in other writeups when I was replacing the VR to begin with. For fun I did connect the VR to a ground but it made zero difference.
To me it seems like it is dropping voltage somewhere and recovering, but I could be making that up. I have not changed spark plugs at all (not sure if that makes any difference on this issue).
I was going to upload a video of the engine to this, but after testing all of the above, the battery wasnt strong enough to start it again, so I put the charger on and will capture it later.
As others have said, it takes Courage to work on these Kohler/Courage engines. Maybe it should be called Kohler/Wisdom, or Kohler/Persistance instead