Interesting problem. Not sure about the answer, either.
Those bikes have an ignition system where current flows thru the primary side of the coil from the battery to the points to ground. To ground when the points are closed and no current flow when the points open. It is the stopping of that current flow when the points open that induces a current in the secondary side of the coil enough to jump the spark plug gap.
So, as a test, I would disconnect the coil wire that goes to the points (and do it AT the points to verify the integrity of that little piece of wire) and repeat the 'power on' test. If the coil still gets hot when you theoretically have broken the path that current is supposed to flow, then you know you've got a coil that's breaking down and going to ground when/where is isn't supposed to.
As an aside, during the resurrection of a '71 CB350, I once left the ignition key on all night (although I had disconnected the lights from the circuit) and the next morning, I had melted one of the coils from the inside out. It got so hot from the current flow that the plastic melted and dripped out, down the engine and into a puddle on the garage floor. Sigh. That puddle of solidified melted plastic was still stuck to the cement floor 4 years later when we moved away...
Good luck with it.
Kirk
