I'd be worried about causing an oil leak from the side cover if it were "massaged". Those things leak often enough when they're not dented. Note that the fully electronic distributor from a 1978 has a smaller diameter and clears the older side cover easily. It is vented like the later ones, but I'm not sure it has the o-ring seal at the cap.
Word of warning about the vent setup: You MUST use the factory check valve in the vent line between the cap and the air cleaner housing, otherwise you can have an exploding cap. I've actually seen this happen when the check valve was not used.
Most FI systems I am familiar with have electronically controlled spark advance. If you do go to FI you may have to consider something like the FJ62/FJ80 distributor used with the 3FE. Of course then you'd need a crank angle sensor too.