On the backfiring, sounds like too lean. This can be a carb problem, as in restricted fuel circuit, vacuum leak, burned out manifold (exhaust heat crossover). If it's been run for an extended time backfiring, the ventura in the carb could be melted.
If the backfiring is a steady popping that increases with throttle, that can be an exhaust valve not opening.
Can also be ignition related, bad plugs, cross wired, carbon tracked cap, bad plug wires, points out of adjustment or bad, condenser bad or loose (if equipped), worn distributor bushings, stuck advance weights, retarded timing.
The vacuum advance that is capped off, I've see that done on industrial engines. It's not really necessary on an engine that runs under heavy load. I think the factory does that for 2 reasons, they didn't want to make a special distributor without one, and they figure it would be short lived, soon fail and become a vacuum leak. You can connect it if you like, I would test it first. It won't make that much difference. If you know the timing specs and have a light, then use them. otherwise just use your ear and judgment, set it where it runs good, starts good and doesn't rattle.
Even the best tuned engine will not run right if the compression is not there. If it idles good, good chance the compression is good. If there is a miss at idle, it's not ignition related, and there are no vacuum leaks, check the compression, look the valve train over, check the backlash in the timing chain.
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