I believe you to be partially right. The 'tit' on the point contact also serves/ed as an indicator if the condensor was too small or too large, depending on which contact the 'tit' developed.
You should find an older, ie, '74 or earlier, Motors manual and follow the instructions for adjusting the regulator. You'll also need a reg thermometer to help set it up. Or maybe take the reg to Advance and let them check it out for free, or buy an electronic one in the old case.
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