You are correct the rail will have higher pressure then after the regulator. But I think you might be missing the point. Let me try to explain it a little better.
Ok you have your fuel pump. It is capable of pushing 100+psi. So in order to have a usable fuel pressure we install a pressure regulator. This regulator keeps the fuel pressure at a pre-determined pressure. In this case it is 3 bar or 43psi.
If you where to hook up the fuel pressure gauge AFTER the regulator you would find maybe 5-10psi if that.
So your pump pushes 100psi, the regulator 'Bleeds off' this pressure to the specified/designed 43psi. To prove this, hook up your pressure gauge again, and watch what happens if you pinch the return side. You will see the pressure spike to 100+psi.
Also to address what people are saying about the leak down guage. I understand your instructions say to put the cylinder at TDC. What your missing is that it has to be TDC on the compression stroke. You have a 4 stroke engine, intake stroke as the pistons goes down and sucks in air, this is when the intake valve is open, then the second stroke the piston goes upward to TDC creating the 'compression' stroke. At this point both valves are closed. Then next stroke is the 'Power' stroke as the piston pushes downward turning the crank. The last stroke is the exhuast stroke, this is where the piston again approaches TDC pushing out the exhuast gasses and the exhuast valve is open.
So as you can see if you are at TDC on the exhuast stroke you will have a exhuast valve open, and to be technically correct, the intake valve will also be on downward stroke as the exhuast valve is closing. They overlap these events to create a 'vacuum' or 'Draft' effect. As the exhuast is flowing out the exhuast valve it will actually help pull in the following intake charge. Kinda like opening two windows in the house to get a 'draft' or 'breeze'. The velocity of one helps pull the other.
So in the end, if you did your leakdown on TDC exhuast you would hear air coming out of the intake and exhuast valves.
I think a more conclusive test here would have been a simple compression test. Typically in diagnosing something of this nature a compression test is done first. After it is determined that a loss of compression is present, THEN you do a leak down to pin point it.
Some diagrams to help you picture things better;
http://www.aa1car.com/library/fuel_pump_diagnose.htm
Here is a video of the 4 cycle process.
http://www.youtube.com/watch?v=-8cXXjsRg70&feature=related
And finally we have a diagram of valve timing. Its for a different application but you can clearly see the overlap of the intake and exhuast at TDC on the exhuast stroke.
