The coil can be moved provided it does not have any secondary parts connected directly to it such as a Hall effect sensor. Make sure that the ignition high tension lead will reach the spark plug without rubbing against anything that could wear through its outer jacket. You probably will have to make some sort of bracket to hold it as opposed to bundling it in foam and tie wrapping it to the airframe.
Model engines in the 30s and 40s had a loose coil that could be mounted anywhere around the motor.