The way that circuit man described things, leads me to believe the Exciter may be forced low in an overload situation.
However, an automatically resetting bimetallic strip would do the same thing from a prolonged overload.
The OP did mention the speed of the connected AC Induction Motor would drop with applied load, then stop altogether at maximum load.
I still am wondering if there is any measurable Voltage from the Generator, once the connected Motor stops, and the Prime Mover becomes unloaded?
If circuit man is still around, is there a measurable Voltage once the Induction Motor stops, and the Prime Mover runs high?
Try connecting a Volt Meter to the unused part of the Generator's Receptacle - or if only a Single Receptacle, connect the Motor to a multi-outlet cord, or plug strip, so you have a Receptacle to insert the Volt Meter's leads into safely and securely.
If there is NO VOLTAGE, then chances are there is an overload "link", which opens during excessive overload conditions (heat), then resets automatically once it cools down.
If there is SOME READABLE VOLTAGE, then chances are the exciter is pulled low somehow.
Scott
