I know I posted the solution elsewhere but in case anyone stumbles upon this thread after a search...

The black sooty spark plugs were due to the base CO adjustment being VERY rich (I'm talking 5 rotations rich, over 10% CO). How it got there I don't know but that's what it was.

The hesitation was due to the ignition control unit which mounts on the inner fender and uses vacuum and an R16 resistor value to calculate the spark signal should be sent. See my later post for more details on this.

Thanks to everyone to helped me solve this, especially Saumil who sent me lots of KE test literature and zakh who spotted the solution!