What's the difference in alternator operation between connecting the sense wire to 12V or leaving it disconnected?
The "S" is the remote sensing wire. It looks at the voltage signal at the actual power distribution point if a bus type system is used.
It is a great feature of these alt.s when used in remotely mounted battery installations, such as boats. But - it is also very usefull in automotive applications for rear mounted batteries or revised wiring systems using a single power tap routing system.
All GM vehicles after the early 70's used a single remote power tap lug mounted around the firewall area to distribute power to the vehicle and accessories.
If you wire one of these alt.s to a 1st gen. with stock wiring using the original voltage reg. as the distribution point, then you want to make sure the "S" terminal is getting a signal from the systems regulator connection, or from another remote battery supplied source, to be sure the alt. is actually 'seeing' the system distribution voltages so it can adjust itself to the need.
Better yet - you should rewire a 1st gen to use a power tap system so you are sure systems and accessories get the correct voltages instead of relying on the cruddy connection system at the regulator and junctions in the looms ...
As far as the 12vdc sourcing to the alt. They do rely on a full system voltage (12~14.5vdc) - unlike thingys like older distributors that need a lower continuous operating voltage.
Accourding to some info in a message I got from Mark [edited] (at 'Mad Electrical') - "... (the) terminal is wired to an ignition switched ON/OFF source, and this circuit can also be used to operate a dash mounted warning light (The warning light is an option, not a requirement)."
This applies to all modern GM alternators - the 10~12Si's and the CS series ...
So if something else is true, maybe your should run it by another source and ignore Mike's information.
BTW - I've been running SI/CS alternators on my boats and have my 77 GM 4X4 wired this way (no idiot light in the truck - just factory gauges) for 7~10 years now and never had a failure to date.
(edit) Sorry, Paul typed faster than me