Ed, (Nessism), the Dyna S uses more power than the stock points ignition because of the extended dwell. That combined with 3 ohm coils can easily use more than double the power of what the stock ignition system used. Over the last 15+ years, there have been periodic posts of people with Dyna S ignitions, on single-phase Kz650's, who reported they could not get their batteries to charge. Going to a 3-phase system seemed to cure them. I suspect there was a run of marginal flywheel magnets that were strong enough to power a stock Kz650, but not one using the Dyna S. The same problem shows up on some Hondas as well.
It is not all 1-phase Kz650's, but only some. Lately we have seen the same issue on some 3-phase 750's as well.
I have been using a capacitor in place of the battery on one of my Kz550's for nearly 10 years without any troubles. It has a factory ignition. The ignition is efficient enough to allow me to use double the stock lighting. I use two 55w halogens instead of the single.
Rattyblack650,
The Dyna III (Dyna 3) is the old version of the Dyna S. It works basically the same, but uses a remote box instead of having everything under the points cover.
A capacitor (that is all a battery eliminator is) in place of the battery works fine on most Kz's that use a permanent magnet alternator, as long as the charging system is in good working order. But I don't know if the Dyna S would be a good candidate for going batteryless. The best option for going batteryless would be the factory electronic ignition from 81 to 83 ish. That uses less power than the points system, especially at startup, and it also works with 3-ohm coils.
If you do go batteryless, be aware you must disable the lights during startup, and must rev the motor before turning the lights on. I use an automatic light relay to shut the lights off every time the motor stops. (I use the starter button to trigger the lights to come on after the bike is running.)
You must also be sure the bike can start on one kick most of the time with the battery. Until the bike is tuned like that, I don't recommend going batteryless.
Also, if you use an aftermarket reg/rec, or later factory one, you must tie the sense (brown) wire to the output wire to prevent accidental over-voltage on the capacitor. They can't handle over-voltage like a battery can.
You will probably want a capacitor anywhere in the range of 5000 to 10,000 microfarad, and at least 50v.