Coil power goes battery - fuse - keyswitch - killswitch - coil. Points are in the ground circuit.
Voltage drop depends on the harness circuit (between battery and coils) resistance and the circuit's current. Current at 12VDC varies with coil resistance. Do you have normal 5 Ohm coils, or are yours lower? The 350 will struggle to charge with lower resistance coils (and almost always fail).
It may be possible to have both coils powered at some crank position with points, but some aftermarket electronic ignitions definitely do this.
Running coil current is lower than stopped, because tha AC impedance of the coil is higher its than DC resistance (but not by a lot). If you do have both points sets closed for a static test, when running this is only for a fraction of a crank rotation.
Other than due to coil current difference when running vs static, harness voltage drop does not change for engine stopped vs running: it's solely a function of harness circuit resistance and current.
And one Volt is at the upper end of what I would th8nk OK. But not atypical. If a piece of harness gauge wire was connected from battery to coils, you would get somewhere around 0.1V voltage drop - assuming 8' of wire, gauge between 18 & 16AWG, and a single 4 Ohm coil load @12VDC.
You can't eliminate the wire. The rest of your drop is from the fuse, switches, and connectors... these can at least be cleaned to minimize resistance.