There would not be any altitude compensation for a diesel engine, at least not any somewhat standard design. The altitude compensation adjusts the mixture for variations in the air pressure at altitude, since a gas engine should run at the same fuel mixture and varying throttle settings. A diesel, on the other hand, has no throttle valve (it's always wide open), and the amount of fuel (and hence mixture) is varied as needed.
I would probably suspect stickiness or play or other similar problems in the governor linkage first. It certainly would not hurt to check basic things in the fuel system as well (fuel filter, leaks in fuel suction lines, shut-off solenoid valve, etc.) I rather doubt a dirty air filter would cause stumbling under mainly low load conditions, but it's also a good thing to verify regardless.
Disclaimer: I am in no way a diesel mechanic, nor a generator expert, so don't take my advice as absolute gospel truth.