Stretching the led on time to 1mS would most likely be counter productive. At 6000rpm the led would fire every 20mS (assuming 4 cycle engine) so 1 mS represents 1/20 * 360 = 18 degrees. Pretty useless for setting the distributor considering we want +/- 1 degree or better! A xenon tube will fire for probably 10uS (someone might be able to give a better answer!) thus satisfying our requirement.

As for answering the question on the transformer - sorry, my knowlege extends to knowing particular circuit configurations - how to design them is another issue! A search of the internet should yield some useful information.