This is maybe my fault for writing that the ignition "sends power into the coils" instead of getting into the details. That's not a technical description, you can't actually "send power" to anything but I was trying to simplify the situation.
You have two ideas here, voltage and current, and you only get power when both are present. The red wire brings a voltage to the coil. A voltage by itself is just a state of being, nothing is actively going on and no power (heat/work) takes place so the coil won't fry just because it's connected to the red wire. The ignition unit controls when current will flow through the coil by connecting the other end to ground. It only charges the coil for a short time before each spark event, the rest of the time the coil is "off". It's still connected to the battery voltage by that red wire but it lacks a path to ground to complete the circuit and get current flow so it's off.
One gotcha about the older mechanical ignition systems was the engine could come to rest at a point where the coil was "on" and actively charging. If you left your key in the run position the battery would discharge through the coil to ground. I don't know if the pamco works that way or not but Pete posts here frequently so he can answer that for you.
I don't think you got that quite right.
lets just take it from the positive pole of the battery.
A wire from the positive pole goes to the input side of switch1 (the main switch or ignition swith, e.g. a toggle or a key). When a switch is on it is said to be "closed" When switch1 is closed the circuit is complete up to the output side of that switch.
A wire runs from the output side of switch1 to the input side of the primary windings of the coil. The output side of the primary windings goes to a wire connected to switch2Switch2 can be a set of points or a hall effect unit or a TCI or a bunch of things - but they all function as switches. The output side of switch2 connects to a wire that goes to ground.
When switch1 AND switch2 are closed (e.g the ignition is turned "on" and the points are in contact) the circuit is complete from the battery, through the primary windings of the coil, switch2 and the ground. This creates a magnetic field.
When switch2 opens it breaks the primary winding circuit and causes the magnetic field to collapse in a higher voltage discharge through the spark-plug wire, into the spark plug, and then to ground (for a one tower coil) at the sparkplug threads.
When you "set the timing" what you are doing is setting the place where switch2 opens, breaks the circuit and cause a "spark."
Switch2 is closed most of the time (it just opens for a nano-second at spark time) So, whenever the key is on the primary windings are energized, the coil is "working" and it will heat up.