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The Owen Dyneto is both a starter and a generator. I have an SE-50 Johnson that runs beautifully. There are rumors (that I cannot substantiate) that say the generator portion, once the battery becomes fully charged, will continue to charge at its designated rate and the result is a buildup of heat at the commutator resulting in it slinging the solder. I have 2 motors with the Dyneto and neither show signs of that happening. So to be safe, I disconnected the third brush to render the generator inoperative. To preserve battery, I did what apparently someone did on your motor and I use a separate switch for ignition and use the sliding switch for the starter. Once started I switch the starter off to preserve battery.
I only have run this engine a couple of times this way and haven’t run it in a long time so I cannot give reports on long term usage. One thing I do think is the amount of advance I get through the Bowden cable that passes through the steering handle is not enough to really make my engine perform.
An electrical engineer could give a decisive answer to the generator heat question.
George