Yes,... I modified my bike for NON-commando wheels. When I did that, the brake on the rear moved to the timing side, which meant I had to remove the speedogearbox from the rear wheel.
I always had a little bit of bounce in my speedo when it was driven by the rear wheel, and like you, I wondered why. With my modification, I had to reverse the guts of the speedo gear box, so I could drive it off the front wheel on the primary side. Yes, I'm crazy,... After I made the switch, the speedo no longer bounces at all. I attribute this to 2 things.
1)The speedo cable is a nice gentle arc upward to the speedometer so it spins consistantly without a "pinch point"
2) I cleaned the hell out of the speedo gear box drive and regreased it with the rocker box oil that Jim Comstock recommended for some other application. (I can't remember atm) When I can hear the cable whirring a bit after a few weeks of riding, I give it another pump of oil. ( I did change the weird pyramid shaped grease nipple on the speedo gear box to a standard grease nipple to make pumping the oil into the gearbox easier)
You should remove, cleane and regrease your speedometer gearbox, to eliminate a "sticky" gearbox as the cause of your pulsing at the speedometer needle. After all the needle is showing you what the cable is doing, which is pulsing because it's getting un-equal resistance as it rotates... sounds like the gearbox to me....