You have an advantage, in Monterey, in that your air temperatures are almost never going to be low enough to run a risk of starting ice if you test regs on the surface. And it's not all that often that the water temperatures drop into the low 40's, but they can. The risk of icing up depends on the type of regulator you have -- environmentally sealed regs are less likely to experience the problem.
What you do if you have a freeflow depends on where you are and how you are diving. A full-on freeflow will empty an 80 cf tank in 90 seconds (Curt Bowen did the study). You don't have much time to play around with the reg and see if you can get it to stop, but you certainly have time to get to your buddy and initiate an air-share. Be prepared for the fact that the freeflowing regulator will create a cloud of bubbles that impair vision, and will be HORRIBLY noisy. (The first time I had a freeflow, both came as a surprise, and made the experience much more stressful.) Sharing gas and immediately beginning a controlled ascent is the BEST solution to a freeflow, assuming both of you have maintained rock bottom reserves, so your buddy has enough gas to get you to the surface. If you aren't sure what rock bottom is, read the gas management article at nwgratefuldiver.com.
There is significant controversy on how to handle the freeflowing tank. If you have a solid buddy and you have practiced air-sharing ascents to the point where you can do them smoothly, then I think it helps a great deal to turn off the freeflowing tank valve. It removes the impediment to vision and gets rid of the noise, and lets everybody relax. However, that means that, if you lose the donated regulator, you are without a source of breathing gas, unless you have arranged your equipment so that you can reach back and turn your tank on yourself, and most people don't ever even try to do that. If you allow the tank to continue to empty, you may get a breath or two on the way up, even if you lose the donated reg, but you will end up with an empty tank at best, and water in your tank/regulator at worst.