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You can read the pros and cons of a series (pass) regulator vs. a shunt regulator from various sources on the web. It sounds bad to have a shunt regulator shorting the alternator's output to ground, but it's a permanent magnet alternator. When its output is shorted to ground, very little power is actually produced, since power = Volts x Amps and volts is near zero at that time. Since it's a PM alternator, the output current is limited even when shorted.
I manufacture electronics for the old Kawasaki triples, and one of my products is a shunt regulator. I have a test rig that has a variable speed motor driving an H2 alternator. Way back when I started I found that when the alternator output is shorted, it's very easy to drive with the motor, and doesn't get hot. My regulators are a switching type that either shorts the output to ground or lets it all through, switched at a high speed so the output is smooth. Danno is right that the regulator itself gets somewhat warm because of the voltage drops in the diodes in it, but it's designed to handle that. I actually use big Schottky diodes that only drop about 0.4 volts in this application, compared to the 3/4 volt or so that a silicon diode drops.
It's interesting that some racers who don't need 12VDC on their bikes actually permanently short the alternator output to effectively take it out of the system and reduce engine power loss without having to modify the alternator.
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