OK, you came to the right place for the answer to this question! The distributors have 2 sets of points; a high speed set which is grounded directly, and a low speed set which is retarded 5 degrees and grounded through the microswitch you describe. This allows the engine to have the retarded ignition timing for a nice smooth idle and have the advanced ignition timing for more power the moment you step on the gas. (At idle the microswitch is closed and the low speed points control the coils, off idle the microswitch is open and the high speed points control the coils.)
I had a problem with my car several months after I bought it where it would lose power at idle and backfire (really loud). It was fine as long as my foot was in it, but really it was not drivable; every time I would let off the gas it would die and then catch and backfire when I applied throttle. Through the help of some of the guys on this forum the trouble was traced to the low speed points set. The remedy was to simply disconnect them. That is what has been done on your car. My car idles too high right now but is fine otherwise, it needs the timing turned down a bit. If your car runs fine then don't give it a second thought. You know what it is now.
The 308 has an ignition system that is marginal at best. Next month I am doing an ignition overhaul to my car which includes swapping it over to electronic ignition, new coils, wires, plugs, etc. I have been doing a lot of research and will keep you informed of my progress and results. The whole ignition upgrade will cost me around $500.
