No, you are not missing anything RAB, but I sure did. That is a very good question... Bruce, how are you maintaining 60HZ at 10KW with only 16HP? Or worded differently, are you SURE you are maintaining 60HZ, or at least the 58 "with only a 1 to 2 herz drop" you mentioned at that 10KW load?  If the problem was available engine HP, then the frequency would fall off under load, which in turn would let the voltage droop excessively in a harmonically excited head. As mentioned, a few HZ can make a large difference in output voltage. I got the impression from your original post, that you were maintaining around 60HZ, which means to me your load was not exceeding available HP. But I missed the 16HP available you mentioned at the start. With losses involved in belting, driving an oversized head, and power generation in general, that exceeds the 2HP per KW which is generally accepted as the sustainable power generation figure...
Bruce, because of the nature of this type centrifugal governor that is directly coupled to the throttle, they have to vary(decrease) a little in frequency/RPM to give a steady throttle increase with a load increase.  The spring is trying to drive it toward full throttle,and the expanding weights are trying to drive it to no throttle with RPM increase. Since the throttle position is dependent on flyweight position and that in turn is dependent on engine RPM, there MUST be a steady decrease in RPM as the load increases, otherwise there will be NO throttle increase to counter the load. A good way to set one up is to set for 62HZ with no electrical load. Your maximum sustainable load will be reached as the RPM decreases under load to provide around 58HZ. In your setup, I would guess that to be closer to 8KW than to 10KW. Â