My discussion was focused primarily on the non dual plugged setup, the D35-1 kit. I said that but you cut off your quote:
I have this kit on my /7, so I feel I know a good bit about it. If you look at the first picture posted by donbmw of the D35-1 kit, the wires to-from the coils are just as they are in a standard points system, although the Red wire seems to be extra. The Brown wire is the switched ground that used to go to the points but now uses the Dyna box to indicate when to switch the "points" open so that the coils can collapse and generate the spark.The Dyna III does not eliminate the wasted spark setup on Airheads, at least for the non dual plugged package.
The second picture has two dual plug setups. One is D35-1 so that's that same as above. The D35-2 is indeed different...I've never really paid much attention to dual plug wiring for Dyna. It appears that 12v is coming to each coil and if the Brown and Black wires act as switched grounds, then it appears that the D35-2 setup can switch one coil independent of the other. Further evidence as you point out is the need for a tach module because the D35-2 kit will fire each coil half as often, resulting in the wrong tach reading. The tach monitors the collapse of the coil to determine the RPM. So that evidence seems to point to the D35-2 setup as not a wasted spark.
From what I understand, the longer the "points" are closed, the coil is being saturated deeper and deeper, resulting in a stronger spark when the field collapses. But the time of saturation should be not be too long as the coil will heat up. This can be a concern when doing maintenance work with key on-ignition off and the points closed...the coils can become very hot over a period of time. Whether the change to a non-wasted spark situation with the D35-2 results in too long of a time for saturation, I doubt it but it's something to consider. It could mean a slight affect on the coil life, but it's probably not quantifiable.
Timing of a wasted spark system with the D35-1 package lets you use a timing light on either spark plug wire to see what is happening to the other cylinder. This is where you might see the ghost S-marks. But with the D35-2 kit, you would have to move the timing light back and forth on the plug wires to see how the other cylinder is firing. This is probably the difficulty mentioned in previous posts about trying to get both sides timed correctly in this situation.