As mentioned, that is quite a gap in the points, for almost being in the flat of the cam. And can't tell if that is cam grease, or the rub block is worn. Being you said you replaced them, I will just assume it is cam grease build up. Bump it until the rub block is on the high point of the cam, and adjust the points to .020".
And not that it's that big of a deal at the moment, but following the rotation of the plug wires, looks like 2 & 3 are crossed, unless my eyes are deceiving me. I'll look tomorrow on my 656, and check the location for number one position on the cap. Can't help for some reason thinking the position of the wires in the cap are 180コ out. The shop manual for my 656 is at the other farm, and it's getting down towards 6 degrees, so I'll look tomorrow... Is #1 marked on that cap..?? If so, it should only fit in one place, due to a notch in the cap, only letting it set completely down in one spot. For some reason, I'm thinking #1 should be the first hole, to the right of the hold down tang towards the front.
And you are correct about the 12V bypassing the resistor on start up. They are designed to give it 12V on startup for a hotter spark, then cut back to 6V to run, once you release the starter button. Supposedly to prolong the life of the points. Minneapolis-Moline used the same starting circuit on a couple of their tractors.