the use of the frame as a conductor is not uncommon, but can be problematic.
I've heard of various cases where the user is using wires to carry the electrical current, with no intent to use the frame as a conductor. Unfortunately, some dynamos and lights have one terminal connected to where it connects to the frame. It's not usually obvious that this connection is being made, though. Depending on how the wires are connected, it is possible to effectively short out the dynamo with the frame.
As such, it can be critical to carefully examine the dynamo or light and determine if one terminal is connected to the frame, or "earth". If so, then the "earth" terminal on the dynamo must be connected to the "earth" terminal on the headlight and tail light.
Steve in Peoria