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I guess this is a GENERATOR regulator, not an alternator regulator.
Have you checked the charging voltage? With the engine at 1500 or more
rpm it should be between 13.5 and 14v. This can be adjusted at the spring
tensioner on the main relay in the VR. It might be that a capacitor would
help with the arcing, but would not address the cause. Could be that
you have a bad winding in your generator making the current intermittent
or some other similar problem. A lot of US cars had capacitors on the
generator for radio interference suppression, so this is not a really
weird thing to do. An ignition capacitor would probably work OK.
(BTW a bad capacitor in your ignition will burn your ignition points too.)
--
George Downs Bartlesville, Heart of the USA!
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