Bill, David -
Good points Bill. I think I may have read David's original post a bit differently - not that the engine speeds up or slows down a lot or for very long, but that it is simply "unloading" as the output drops off and then it is "lugging down" as the load then comes back on. That is, it is just a normal lag of the governor which one would see if you, say, flipped on a very large load. RPM's will momentarily drop as the governor quickly - but not instantaneously - feeds more fuel to keep the engine at 1500 (or 1800) rpm, the governor being a mechanical device with a discrete response time.
Perhaps David can shed more light on this that might help home in on engine vs. generator.
Craig Briggs - s/v Sangaris / SN68 Tropic Isle Harbor, FL