DIM Electronic Advance Ignition

Kit,

Your distributor mod looks like an optical pickup. The Holley XR700 and XR3000 uses that, going back to the 1990's (maybe 1980's). I have had one in several cars. A plastic slotted disk goes under the rotor. They claimed 0.1 deg accuracy in their J.C. Whitney ad, though timing chain jitter and other things make that questionable. I think Allison was the original developer. There was another one in J.C. Whitney which used reflection off the points cam surface.

The optical sensor failed in one of my XR700's and replacements are >$50 so I picked it apart, researched the PN's, and ordered a new infrared transmitter & receiver from Digi-Key. Your approach with an integral receiver/detector is simpler and more robust.