The ballast is not "just" for points. Pretty much all U.S. cars used that setup "in the day." The ballast acts as a sort of regulator--as the engine changes RPM, and the coil tries to draw more, the ballast heats up--and cuts back current flow, hence the name "ballast."
Also, "it sort of" works like this..........with your car normally running at system voltage of nominal 14V (not 12) the coil runs "about" 11-12 plus or minus. When starting, of course the battery is pulled down in voltage, worse on cold winter days. So the bypass circuit feeds direct battery power to the coil + for starting, thus still feeding 10-11V to the coil
I don't know how Jensen did the bypass circuit---Mopar is the only folks who did the bypass circuit in the ignition switch. Ford/ GM (and I guess AMC) used starter solenoids with an extra relay contact, labled "I" for "Ignition." That is what feeds hot 12V to the coil for start
ON THAT NOTE check that your coil IS getting voltage when cranking--maybe the bypass circuit has a problem
