You have a fundamental misunderstanding of the electrical circuit of a magneto. When the 2.5kV was applied to the coil in that test all of the wires of the primary and secondary were elevated to that potential. There was no voltage whatever between one layer of windings and the next, so the insulation on the LT (and HT) wires is irrelevant.
Just an observation here. I'm not a magneto expert, but I do work with electric motors for a living, and I'm having trouble understanding the above statement in your previous post. In my experience, if a coil of wire is conducting a current, there will be a difference of potential between the wires in different layers of that coil, because any length of wire will have resistance. This is why a coil can short circuit to itself- a turn to turn short. In my industry, a turn-to turn short is one of the more difficult faults to catch, and is usually caused by overhandling the wire during coil winding. Vacuum impregnation of potting varnish helps, but if two wires are in contact with each other, and their varnish coating is degraded, it will prove to you quickly that there is a definately a voltage between the layers of a coil.
Perhaps I'm not understanding a subtle difference between a magneto and an electric motor.
This is not meant to detract from a thoroughly enjoyable and informative thread. I'm looking forward to the next update.