Going with an internally regulated alternator is a good upgrade. (Alternator with the rectangular plug). Square plug is the older style with the external regulator.
I believe the blue wire you are asking about is the exciter wire from the ignition. It should read voltage with the key on.
Here is a link to discussion on upgrading to an internally regulated alternator.
Jim
http://67-72chevytrucks.com/vboard/s...tor+and+change