No, it's correct.
Cam notch horizontal at either 3 or 9 o'clock determines the TDC compression or TDC exhaust stroke for cyls 1 & 4. (valve timing)
Apparently something's going on with the (ignition timing) points wiring as you've found.
Edit: just checked the 550 manual, the blue wire is for points 1-4 and yellow for points 2-3.
So were they on the wrong point sets?