If the engine has been installed less than 2 years ago, I would take it back to the dealer for warranty repair. Now for the 12.7 at the battery when running, I would say it isn't charging. Now also from what I can gather this may be a regulated charging system. So the battery wire coming from the mower is going into a single onto the engine. Is this wire connected to a small box. The wire between the mower and the engine would be DC not AC. If you are getting 1.5 AC from the wire coming out from under the flywheel then that sounds like a bad stator.
The dealer didn't do anything wrong, things just happen and he should be able to fix it for you.