I have an older engine that came off an old sears chainsaw, it has a magneto but uses points to fire the sparkplug. My question is can I rig a coil with a battery pack to drive it and let the points tell it when to fire? This would allow me to do away with the flywheel and the mag portion of the ignition. Not sure of engine size, I measured the bore as best as I could and then the stroke and it came out to be 53cc.

Well while I have never thought about your idea I can offer this. You may want to look at losing the coil and points too. Could be near a pound of weight loss there. Also, since you will need a prop hub for the engine either way, consider going EI. CH Ignitions can get you into one for around $100.00. Then add a pickup sensor and a timing ring and you are ready to go time the engine and fly.

Then take off the EI: the battery that goes with it, and the pickup & ring & plug & plug interference cover & whatnot.... all that weighs something right?

Then install a Glowplug Adaptor($10) & glowplug, tune the carb to run richer.
Run GGL gasglow mix on that much lighter engine with just $10 of conversion parts

To answer your question - yes you could use the points to fire an ignition system to run your engine. That is the way it was done before we had magnetos small enough for model airplanes and before we had glow plugs. I don't know where you would get the right coil though. The mag coil might work. You do know you will need a coil don't you?
C&H has a device called a jump start. Its made to charge the coil to make starting with the mag easier. It might work but I don't know about on a continuous basis.
You will also need a flywheel but it can be smaller than the magneto flywheel.

Between 1 and 2 must connect the points.

You can hook the points up with a coil and battery no problem, if you can find a suitable coil. You might be able to cut down the stock coil and use it. You will find the current draw fairly high, but a 1500 to 2000 mah 3 cell Lipoly battery should give you over an hours running time. You will have to do current draw tests with whatever coil you use to find out.

Let us know how it turns out for reference,
AV8TOR