Why are my distributor cap terminals burnt?

I'm not too sure there IS a problem. The hotter the ignition system, the more power is going through those contacts. It may have to do with current weather (humidity or lack of)

What are you running for plug wires? Those may have an effect. I believe MSD? does not recommend solid core wires.

If the coil is recommended as useable for the system you are using, I'd say "run it and see"