That @#^%$@!!! KZ650!

Ok time to chime in on this one. My bike still doesn't charge worth a sh*t tried replacement stators all used but from charging bikes lets skip ahead here. After replacing the clutch cable that failed on the road which sucked big time. shorty pun intended the bike ran like sh*t again when I checked the regulator connections they were melted oopppsss. Now this didn't happen right away after I changed the clutch cable maybe weeks later. I removed the stator and cover checked everything looked ok? hhmmmm only after removing the clutch cable/gear housing cover did the problem present itself. somehow silly me pinched one of the stator wires under the cover and it took weeks to finally ground itself. easy fix stupid mistake. If I were you I would run all new wires from the stator to the regulator and to the battery from the regulator just to be on the safe side.

I'm voting with OMR and others who posted that you've got some kind of partial short to ground SOMEWHERE in your harness. You are overworking the charging system and it won't put up with that kind of treatment for long. The weakest component will fail first. Sometimes it's the reg/rect, sometimes it's the stator.
Many, many moons ago I had the same type of problem to troubleshoot when I was turning wrenches for a living. Turns out it was 2 pinched wires (one in the taillight harness and one in a brake light switch) causing partial shorts to ground. It wasn't enough to blow the fuses in either circuit....but it was enough to overwork the just-marginal stock charging system on that particular bike and eventually fry components. I checked the current draw on ALL the circuits with an ammeter and then chased the shorts with an accurate ohmmeter...but it DID cause a lot of head-scratching until I sat down and thought it out.
My .02 worth....

I do know I had all kinds of issues with the wires run inside the bars, pulled them, fixed the bad spots and ran them on the out side of the bars, cured a lot of issues.

this may be one place to look, but I am still wondering about the rest of the wires on the bike, you may need to just sit down and check them all to be safe.