Good way of putting it...but something like that. Some get a double signal making it read high so the small diode blocks it and yes you have to put them correct way round. Mine is up near the gauge just wired in line..
One thing I haven't added is the pull up, As a previous source mentioned to have the resistor on the signal wire yeah it's set to 4. But I will tripple check that for safe measure.
But it should be a hand picked OA79 for best fidelity, mounted with brass screw terminals on a lacquered mahogany base with a blown glass bell jar covering it.
I just went off and pulled out my simulation of a Kettering car ignition circuit and the problem becomes quite clear : when the points first open, the primary voltage on the coil shoots up to a few hundred volts (in my simulation about 300-500 volts) .Then the plug fires, the voltage across the points drops to zero again. Then a bit later, the condenser charges up and the voltage goes back up to 12 volts. So you get a narrow big fast pulse and then a slow fat pulse. (which is over 6 volts high) Simple rev counters count both of these as being over 6 volts, so show double RPM. At different RPMs the energy stored in the coil changes and so the first big pulse gets weaker. With the diode facing anode (stripe) to coil, it seems to have the effect of making the first pulse stretch out by charging up the wire going to the rev counter at the front. If the diode does not work you could try a pretty little Mullard capacitor from the 1970's with a brown black red colour code (1000 pF) ... or yellow purple red (4700pF) as these are nice colours. Keep the diode, connect capacitor across rev counter pulse terminal and ground.
One circuit idea that @Jules65 put me on to was to use Zener diodes to block pulses less than about 50 volts then clip that back to 12 volts. It also had an opto isolator in the circuit. Of course one other factor is that the electronic unit like Pertronix does not have a condensor so when the points open the voltage spikes up, drops back to zero but returns fast to 12 volts rather than hanging near zero. I think some bench tests of ideas may be worth while.. I think there should be a simple little circuit that will work with both electronic and points with 5 metres of wire. It would go near the coil and have the added advantage of reducing radio interference by keeping the massive flyback voltage away from the wiring.
Its so when you get to the roundabout with your brand new quiet smooth engine you can tell its still running without checking the two warning lights... Thats with oil at 95 degrees.