The first person that I know of to downsize a modern motor for hill climb was Dan Watson my old compnay did the machine work for him first on a CBR900RR then on an F3 or F4. He went out and won both the 800cc and 540cc AMA Championships that year. I think he was the first to win both in a season.
I would not be surprised if the KTM had some kind of external magneto ignition on it. We used to put them on dragbikes but electronic ignitions repalced them. http://i13.photobucket.com/albums/a2...y/100_0414.jpg
"Remember that an enduro tests the endurance of three things: your machine, your body, and your wits. Only one has to fail to keep you from reaching the finish line." Cycle World March 1966