To answer the reeds question, yes the reeds for the chamber on the downstroke (compression) will be closed. The reeds for the chamber on the upstroke will be open (inhalation). So, it if there is an ignition source, the fuel could ignite in the crankcase and blow back.
Reeds can weaken and be ever-slightly open.
1) Blowback could originate in the combustion chamber (at close to TDC) and make it past the rings as the reeds are open at the time just before the piston descends.
2) What you are seeing is vaporized fuel, not combusted fuel when an engine sneezes from lean fuel-air mix.
3) Reeds are bent
4) Spark plug leads are reversed. This means the spark occurs while the exhaust ports are open.
