Yes, it acts as a heat sink to the bike's frame. Excess voltage from the stator gets dumped as heat.
Have you hardwired the three yellow wires at the connector yet?
Now extremely hot temps could mean there's an issue with it. I know my VFR had R/R problems due to the lack of airflow, and some guys go so far as to attach a CPU fan to the r/r. Excessive heat kills them.