It's all good.
I replace the alternator with a remanufactured bosch (actually remanufactured by REMY). it is generating 13.6-14.2V now. Life is good.
Thinking back, after I replaced the battery 2 weeks ago, I checked the charging voltage and it only showed 13.1-13.2 V. That's probably a tell tale sign that the alternator is dying a slow death.
Lesson learn: If the alternator is already 11 years old with 100k miles on it, don't bother rebuilding it on your own, it is more cost effective to go get a remanufactured unit. The rectifiers will die too and the rectifier assembly is not very easy to source.
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 98 ML320 (gone but not forgotten)
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