Yes, wasted spark - since this engine does not have a true camshaft, it is easier to put the ignition on the crank.
Unless of course it is an Atkinson Cycle engine.
Which coil are you using?
Just to clarify, the ballast resistor is used when an 8v coil is used on a 12v system.
The idea is to bypass the resistor on startup and therefore supplying 12v to the 8v primary to give better start.
I use points on the Atkinson I built.
They are from the now obsolete 4 cylinder Simca car and best part is they are very small as they used 2 sets in the distributor.
For the condensor I used around 0.22uF 400V pcb capacitor.
As I mounted it in a switch box with all the other wiring etc. it doesn't need any metal casing for heat isolation.
Still electrically across the points but the 6" to 8" distance from the points doesn't seem to affect the spark properties and it runs quite well.
Coil was from a small motorcycle and at the time unknown as to whether it was CDI, kettering or magneto.
I suspect the latter as it works well with a 7.2v lipo and have known others who tried cdi coils on 12v and instantly cooked them.
Currently looking at some videos from doc0455 on you tube where he simply adds high power resistance to the primary of CDI coils for use on a buzz setup on 6V.
Simple if it works as the little GY6 coils are readily available on Ebay etc. for maybe AUS$6.00.
Also found this indepth detail on ignition systems.(pdf below)