It very much could be the HT coil, I had an issue just like this with a hobbit that drove me nuts, changed the coil, problem solved... 2 days of my life wasted before I made that realization hahaha If you have an extra lying around it’s definitely worth a shot. And points go bad when the corrosion is so bed the contacts are ruined, or they’ve been sanded down unevenly. however I don’t see any reason points would be the issue due to failure involving heat.
call me crazy, but trans oil gets hot and viscous, I wouldn’t be surprised if it poked through the seal into your combustion chamber at a high temp. Any white smoke out of the exhaust?