Jon,
it seems that you have the older version of the ignition.
does it sais "4.8V" in blue on it?

if so, these ignitions are very sensitive and it might be malfunction.
i had one of these ignition that burnt.
eventually i changed the entire engine to GT2 with the new ignition module.

on one of my gas engines (DZY 26cc) i had a similar problem, the engine didnt hold a full throttle for more than half a second and was sound exactly as you described.
i found out that one of the DC capacitors (internal component) of the ignition module broke off - probably due to vibration.