The idea was to also jumper the two leads when the VR was disconnected. With it out of the circuit, of course there will be no charging, and all you'll see is battery voltage. In this case, it's not 12.5 because .3Volt is being used for ignition, and was used for starting the bike.
But the 13.5V tells me your system is charging, just not as much as it could.
I recall reading somewhere that the amount of current flowing is more important than high voltage; 13 or 13.5 would be plenty sufficient as long as there's plenty of current. One of my bikes was like that, and as long as the connections caused no resistance to the flow, it worked fine.
Trying to determine low flow can be as much of a problem as finding an intermittent fault sometimes. First thing I'd do is check all the connections including grounds. Anything that doesn't look tip-top, make it so. After that, it's gotta be either the rotor or stator with a blown field. These are three phase systems and one phase can go out and still operate - but at a lower output.
If you could, do one more test for us - run it with the VR connection jumpered at 3500RPM and give us the Battery reading. If it's at 14 or 14.25, the alternator is good and the regulator is the culprit.
You see, what is happening when you jumper that connection is bypassing the regulator. The regulator TURNS OFF the alternator to keep the voltage down to the correct level. When you jumper those two leads, it's telling the system to GO FOR IT! There's no cops, no speed bumps - just pedal to the metal, go for it! So it'll put out every last millivolt it's got.
We want to know what it's capable of.
