Your not blowing spark out unless your running 15psi or more. If the car is breaking up at 4k rpm you should be checking spark hardware latency to ensure it's not retarding timing with rpm.
If you do install the msd this latency issue tends to get even worse. Lock the timing at 20* and rev the engine to 5k and hold while strobing the timing, does it retsrd with rpm? If it does bump the latency up by 10, I have had to run these as much as 210microseconds.
The microsquirt can simply fire the msd directly over the white wire or you can install it in the traditional way and let the tfi trigger the msd. Both will work, increase the spark duty to 75% with the msd box. The grey tfi used in our cars has no dwell control from the eec so if they are attempting to do so it will overheat the tfi and cause spark issues as well.
Let me know if you need anything else, I do remote tunes.