That's right, the fuel pump will have to be bridged in order for it to cycle on when the key is in the on position, I thought you were saying under normal use that it'll turn on without cranking the motor first.
As for the timing... you will still have awesome compression even if you're timing is off. I'm talking about your
ignition timing. To me it sounds like your cps is 180 out, and you're firing on the exhaust stroke. Had the exact same thing happen to me with my N/A after putting the distributor in wrong.
Typically when you install the CPS (once you verify you're on the correct stroke) you place it with the set bolt centered on the cps flange. Keep in mind that before you install a CPS you have to align the little gear with the larger gear on the cps shaft before placing in the engine. There is a little stub on the tiny gear on the end of the shaft, align that with the notch on the large alignment gear teeth above it on the shaft. Sorry if that sounds confusing, the tsrm explains it much better with pictures
here. After you get the engine running, you set the ignition timing by putting a jumper wire between terminals TE1 and E1, connect a timing light to the No. 6 coil wire, and rotate the cps until the timing is set to 10 degrees btdc. While timing, remove the jumper wire and verify that the timing advances to at least 12 degrees btdc.
Sorry if this seems drawn out, I've just spent the last few days running all over timing issues with my 7MGTE and want to help out as much as I can with the knowledge I acquired.