Doc, I posted a procedure for checking the gauges that use a sensor. As it happens, neither the voltmeter or ammeter have a sensor, and so cannot be verified using the procedure.
Test a voltmeter by putting a good multimeter across its terminals. Verify that they read nearly the same.
The only way to test an ammeter is to put current through it. You can remove one wire and put another meter in series with it, but this is some trouble.
Sean, if you disconnect the battery from the alternator (I assume that is what "shut the battery off" means) then the voltage at the alternator output could be most anything -- it is designed to work with a battery. I would measure the actual voltage while charging the battery. Of course, that charging voltage is measured at the battery. The alternator puts out more, and there is voltage drop between the alternator hot terminal and the hot battery terminal, and also a drop between the battery negative and the alternator frame. You should measure both. Your battery needs from 13.8V to 14.25V (depending) to charge. Your alternator will have to put out more.
Your boat was built to use the alternator bracket and mounting as the return current path from the battery. That is standard practice in cars and so that is the way the engine was made. In hot, salty, wet Florida, relying on a steel-to-steel electrical connection is daft. You can't tell with an ohmmeter if the connection is good. At 50 Amps, a resistance of 0.01 Ohm, not measurable without special stuff, will cost you half a volt. Things are probably better in fresh water, but I would go with the wire. I used to make them up myself, but you can buy ground straps at Autozone that will do the trick, if you can find a guy who knows the stock and doesn't need make/model to get the part.
Or you can get one at
http://www.delcity.net/store/Switch!to!Starter-Cables/p_1005.h_89497.a_1.t_1I am not sure why your current reading fluctuates. I would get everything else working, and then take on that problem if it is still doing it, at cruise. 1500 rpm is still on the edge of working for most alternators.
1975 32' Flybridge Sedan, twin Perkins 6-354 diesels, 1:1.53 velvetdrives, 16 X 19 props. Merritt Island, Florida