Just an update, but question still stands. I figured it may be a bad condenser, since it was only that side that was badly arcing. It had 560 miles on it since I rebuilt the bike. I replaced the condensers (with Diachi pieces from CB750 Supply) when it was rebuilt, and figured maybe they were not great units. So I had my original TEC condensers sitting on the shelf, but they had obviously seen better days with some external corrosion. I cleaned them up on the wire wheel, threw some dielectric grease on the outside just to keep them from rusting, and plugged them on. Same thing. 1-4 arcing pretty dramatically, 2-3 just a little.
I don't have another set of points, but that would be my next guess. Unless it is completely normal (which I do not think - I'm guessing that if I just keep riding it as is, it will pit the points).
Anyone?