The PCM detects the charging voltage somewhere and adjusts the voltage on the field coil accordingly using Pulse Width Modulation (PWM) which are ON/OFF pulses of voltage changing in duration of pulse depending on the required voltage output needed.
I had major problems on my Export 2002 CRD caused by wiring harness damage caused by a front bumper bashing.....with a voltmeter plugged into the front cigar lighter so that I could monitor the voltage while driving I would find that if I did some action such as turning the front wipers ON the voltage would rise to +17 volts at which time there would be a "ping" and the Jeep would grind to a halt. So after re-starting I would have to avoid using the wipers....pity I was on a long trip and it was pouring with rain!
I ended up tracing about 7 wires in the harness up front that were semi-shorting to ground so I had to replace them all....by this time the battery had boiled itself to destruction.
I would suggest that you check all the connections are clean and tight ie. the battery terminals, the negative lead going to chassis and the engine grounding strips grounding the engine to chassis.
The early KJs have a Battery temperature Sensor located under the battery which helps the PCM adjust the voltage slightly according to temperature...if this fails it sets the same red Battery Icon as a charging problem does. Possibly this sensor is not working properly...you can remove it after removing the battery....if your Jeep has this sensor fitted. Measure the resistance of the sensor at room temperature....should be around
2,000 Ohms if I remember correctly. Warm up the sensor on a light bulb and the resistance should drop down to about 30 Ohms if it is working.
I had a problem with the one side of this sensor....supposed to go to ground....had its ground go missing somewhere so I added my own ground. I also had to ground the metal casing of my PCM....ECM on the CRD...down to chassis to finally resolve all my issues.
You can get the Jeep KJ Service Manuals for your year model...except 2005...here.
This includes Theory of Operations and the wiring diagrams:
http://www.colorado4wheel.com/manuals/Jeep/KJ