How does this kind of test show if the alt is bad (or good) and the VR is bad (or good)?
The voltage should hold within acceptable range under the full range of load conditions.
Or is the VR the only thing that will typically go bad in a alternator?
No. Lots of other things can go wrong. Brushes, diodes, bearings, windings, slip rings, VR. That's about it! -- Jim