Adrian,
From what I remember from my testing days an insulation resistance test instrument uses a DC reference test voltage then measures the leakage current to determine if the insulation is compromised. So you are making an error when comparing the AC system voltage with the DC test voltage.
You cannot compare the two.
Megger testing has been around for a long time and the results have been proven to be very useful in T shooting all kinds of problems. Suggest you read up on literature on the subject such as "A Stitch in Time" by the Biddle Co (I think it's AVO now) and NETA Acceptance and Maintenance Testing Specs as starters.