Re: 1960 Johnson RDS-22 40HP
I haven't read this whole thread, but a couple of things you just said jump right out at me. J4J and J4C plugs are the same length. The C only means it has a copper core. If the piston hit the plug and closed up the gap, you have catastrophic damage inside the powerhead which allowed the piston to come up that far.
Also, the coils rubbing on the magnets: As said, they should be adjusted flush with the machined edges on the armature plate. However if they are adjusted that way and they still rub, something is loose. The armature plate could be worn out, or the retaining ring that holds it on could be installed upside down (it goes tapered side up), OR -- get this-- the main bearing could be worn letting the crankshaft and flywheel to flop back and forth. And THAT, my friend, goes along with the possibility that the pistons are hitting the plugs because of catastrophic damage inside.
Try moving the flywheel fore and aft. If there is any more than barely perceptable movement, the bearing is shot. With the plugs out, stick a screwdriver into the hole and against the piston. Turn the flywheel and follow the piston with the screwdriver, without pushing on the screwdriver. When the piston is about half way on the downstroke, stop turning the flywheel and then give a push on the screwdriver. If it moves with a clunk, the piston or connecting rod bearings are shot.
Just a bit of history: The 1960 - 40hp was known to break crankshafts. I hope that isn't what you have.