I wouldn't trust the "1" on the regulator without verifying with an independent low-pressure gauge teed in.
In any case, these generators don't really need fuel pressure "dialed in" to run properly. What they need is a fuel bowl with proper level under varying conditions. Of course if there are some restrictions, that level can vary depending on pressure and load. For instance, if there is a blockage and you're running at 1 psi, you might get enough fuel to run under a no-load situation, but under a heavy load that demands more fuel, you might start starving out if 1 psi can't force enough flow through the restriction to keep up with demand.
On the flip side, if your needle/seat/float is compromised, you might flood out with inadequate demand. The float/needle/seat should be able to hold back 4 psi--full stop. If they can't hold back 4 psi, and there's a leakage rate getting past the needle and seat, that leakage rate will be worse at 4 psi than it is a 1 psi. So 1 psi might seem to work better under light loads when the demand can seem to keep up with the current leakage rate.
Even worse, you could have both issues. You could have a restriction the slows the flow during high loads, and a leak that allows too much flow during light loads. In that case, you'll never get the fuel pressure dialed in just right (which is a band-aid anyway).
If I were in your shoes, I'd want to know for dead-certain that the needle and seat can perform their job at 4+ psi. I think I'd hook up a clear fuel line running uphill from the carb, fill it with fuel so I could see the level. See if gravity is enough, watch to see if the fuel level drops on its own. If not, hook up an air source and see if 4 or 5 psi pushes the fuel down the clear line and into the carb (doing all this with the generator off of course). If the carb allows the excess fuel in while the generator isn't running, then the float/needle/seat need revisited again.
). I wasn't aware the needle/seat vs. demand regulated the pressure of the fuel system; I was wondering how there could be a range of pressures instead of a fixed pressure. Now I understand why it's been mentioned "1-4" instead of a fixed value or a lower value. While it may not be needed at the moment (or at 50 years might be), it sounds like a full servicing of the carb, plus returning the pump to original pressure-range (and eliminate the regulator) would be a good place to start.
