That condenser is just there to protect the points from arcing.
As it takes a bit of energy to run that coil, and note here the secondary is not connected to ground but to the primary winding, I think they are saving power by kicking back some energy back in to the battery. Also think about the speed that the field needs to build again. Back In my hot rod days, xome of my 8 cylinder engines turned 8,000 RPMs.
Not an engineer, but I would think the following about the diode you suggest.
Diode is a possible failure point that was not there before.
Diode on coil is in a very hot location an in my experience very hot electronics do not last long.
I would also guess that a standard diode would fry before it turns on, remember that coil's whole purpose is to create a spark where a spark does not want to happen that is why it takes 20,000 volts or more to ark across a small gap of 25 thousandth of an inch. That coil is built to create a big inductive spike with a very fast transition time to fire spark plug.
With a super fast Shockley diode being needed where the design not pushing a fast transition times like power supplies and motor drives, What diode would you use where the coil is built for very fast transition as it purpose in life is combined with very high voltage and very high heat environment?
C