what about missed cycles in case of a miss-fire?? i guess the spark plug technique would not help on that front.

Racelogic has this on Traction control:
"When wheelspin is detected the engine power is reduced until grip is resumed. This occurs in a thousandth of a second, and appears to the driver as a slight miss-fire with no loss in acceleration"

If this is true then the RPM reading is not correct if tapped from the spark plug signal