That "special" filter is the same one used on every other fuel only Howell setup, in that it just triggers the ECM as the pulses come into it. Basically just takes the coil negative signal and buffers it to provide a ground pulse to the ECM.
That hall effect sensor should drive the GM ECM, since the output signal would be very similar to what the HEI module would provide (square wave pulled up to the pull up voltage). You'll want to make sure the pull up voltage or output positive voltage of the sensor is no more than 5V. That sensor can be powered by 5V which will take care of that.
I think you're on the right track with using a crank trigger with evenly spaced triggers, to get a more stable RPM input. You still will not have any spark control ability doing this.
Alternatively you could look at the Megasquirt line. The MS2 and Microsquirt (as well as other models) allow for odd fire engines and would allow spark timing control as well.
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