Can we assume that this is an older type engine with a simple ignition system? If so it would be better to short the points to cut the engine rather than to remove 12V from the coil. However, you have to consider that when your rev limiter cuts out the ignition the engine is still turning fast and is still sucking in gas/air mixture which now does not get ignited and accumulates in the muffler. As soon as your ignition cuts back in you will get a big bang as that gas ignites in the muffler - not the best idea.
Rather than tinkering with the ignition you would be better off reducing the throttle somehow to limit the revs, perhaps some solenoid to do that to the linkage.
I would not want to drive a car where the ingition keeps cutting in and out, could be very dangerous if one was in the process of overtaking.