I then bend the points plate square again. It seems that the base was bent slightly and when fastening the locking screw the whole thing tend to lift at the cam end, but I could only notice this without the flywheel. By the slight signs of wear, I suspect that the points plate lifted out of the dimple at the cam end. I put things back and discovered to my delight the backing plate simply slips back in place, previously I had to tap it in all the way. (There was a slight burr on the crank dimple which I removed.) Next I set the timing and noticed a considerable difference.
Previously turning the flywheel, the points tend to open slowly, i.e. sort of linear. Now it stay close and with even a very slight movement of the flywheel, it fully opens. I thought it wierd, and pulled everything apart again to see if I missed something, but nothing strange. Put it back again, same thing happens. Quick opening of points. I set it anyway to 0,5mm and started up the Seagull dry. It ticked over happily and gone is the misfiring/four/six stroking I had prior to this at the same points setting. I'm still stupified, but I expect with the bend points plate the cam arm had free play since it lifted slightly out of the dimple. Previously after a minute or so of running, there was always a change in the points gap if I rechecked, no matter how tight I locked the screw, now it seems to stay put.

Questions: Is the points supposed to fully open with a degree or two of flywheel rotation or am I barking up the wrong tree?

The hole for the cam screw in the points plate is oval in shape. Is this normal or should it be perfectly round?

Sad part. The first water test will only be possible next week end...

Just to explain the "degree or two of flywheel rotation."
Old way: As the leading edge of the flywheel hole aligns with points, it starts to open. (More or less) It only reaches fully open as the last half of the hole moves over the points. This is where I set it and feeler gauge goes straight in.
New way: The leading edge of flywheel moves over points. It is still closed. It stay close untill the hole has almost passed the points. Suddenly it opens fully just as the following edge moves over the points. At this point the feeler gauge can't go straight down the hole as before.