Routemaster
 

Is it true that if I fit a small auxiliary generator to a Routemaster bus and use it for a private purpose, this will release me from having to comply with many of the rules that applied when the bus was used as a public passenger carrying vehicle?

As far as I know, if you don't offer your vehicle 'for hire or reward' then you don't have to comply with the licensing requirements (other than VED for a private vehicle and a simple MOT). If the vehicle was first registered before January 1st 1973 (soon to be January 1st 1974) then your VED would be zero.

I think that there's an exemption for MOT too (motor vehicles first used before 1st January 1960),

We are looking at converting down stairs into a coffee bar and having seats up stairs for a charity i have seen it done on american school bus but just need to get around some of the legal requirements and have heard that if you fit a generator you can class it as fairground vehicle?

Only if you are a bone fide fairground operator I believe.
http://www.showmensguild.com/transport.htm

The red Routemaster's I see now are used for weddings and advertising and see them on the M6.