When a diode blows the regulator circuit no longer functions properly.  Often that means alternator's voltage output goes high.  Therefore, you'll see current flowing but the voltage is too high and can damage the battery.

If the brushes are worn you'll generally see a flickering red light.  Current may be flowing some of the time but not all of the time.  

Take the unit to a local auto parts store and have it bench tested.  They typically do not charge for testing.

Well, if so, why would the amp meter show it charging?  That's what I don't understand - why the light would change brightness with more revs, and why the gauge shows it charging.  Wondering if a wire is off somewhere...

I would just to take. to Willis Electric.. local shop here in Shelby NC and have Steve rebuild it.. only about $50. total.. sure you can find electric shop locally.. btw. I have been buying the alternators with 70 Amps for $119.. from him for years.. btw. same alternator as Ford tractor.. later bc

If you are extremely lucky it will be worn brushes.  However, it could also be a failed diode.    

I have a generator light problem - '73 Innocenti Mini Cooper 1300 Export (with an alternator of course). Generator light glows red at idle and gets brighter with engine revs as amp meter goes higher. Amp meter shows charging OK, but shows discharge at idle to strong charge off idle. Any ideas?