Actu
You’re being very … um … negative, Woz

Actually, it's more to do with "phase" and "180 degree (un)phase" when those bobbins in the rear dynamo all whirl about. Called AC. in heavy metal terms. It is a generator / alternator in geek terms.
There needs to be a mobile kinetic driven
closed circuit from that power unit, and then distribute it out, one way or another. That is rotational force when riding. The frame is one conductor in the distributor of the power that is all. Don't fuss at this point with optimisation and electrical resistance and "dim" lights. Get the circuit
closed.
A properly adjusted headset demands a metal to metal set-up.
The actual junction boxes and where they are on your bicycle, if up for modification, well take your pick. I would choose the front light in that very British structure, and well conceived too - electrically speaking.
I would advise above all a simple rear wheel / repair. So a connector to plug and unplug close to the offending dyno-bub for electricals to not be rewired road side with screw drivers and what not. Especially when pissed when out of the pub. When pissed tolerance can play a role.
I can't doubt for any moment, Raleigh did not produce a bike for intended purpose, at the period, without thinking it through,
There is no way at-all this can't function as intended to be according to original design specs. It is all sound and will work out IMHO.