Are "Upgraded" CDIs Worth it?

Oil in the pipe simply means you are running a two stroke. The spark has no effect on oil in the pipe, and you WANT some oil left on the cylinder and piston after combustion. This is what lubricates the engine.
Switch to 40:1 and use a good oil.
The ignition is going to have very little effect on overall performance unless it is timed differently than stock. The Jag has been accused of retarding timing to hide crank problems by holding down rpm. The Lightning has been getting better reviews, but I have yet to see any real data showing a real world difference in speed and power.
As long as the stock spark ignites the mix, spark intensity won't matter much on a china girl. A good timing curve is what makes a two stroke run better.
Remember: Advertising can CLAIM anything. Real world results are more dependable.

Maybe drill a small hole and put a screw in it to let it drain?

I run the Lighting myself on all my personal builds. Ill never run a stock cdi on one of my bikes again. The Lighting on a stock engine it is noticeable but on a more advance engine it is much more noticeable. The lighting helps your power from low end all the way to your max rpm.

In my experience the HDs Lightening CDI is a great product, I noticed a difference in how the engine runs with it better low end power and response and higher rpm potential.

I know some people will always be skeptical and not everyone feels they need anything more than what comes in the kit, which actually does a good job, but the HDs Lightening and better coil is an improvement over stock and many if not all of us who have run it have noticed a difference on the positive side of things, some stuff out there is just fluff but the Lightening CDI isn't one of them in my experience.

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No one "has" to believe me, and at higher RPM's so many other variables affect seat of the pants feel - but starting and lower RPM spark are absolutely stronger, huger, more robust - whatever word you want to use. And maybe I'm on crack and tired and just making this junk up, but bikes START WAY EASIER with well made upgraded CDI's.

I think the spark is more consistently strong if I were to use flowery language. Do I have a dynometer, 0-40 mph times? No I don't.

I trust the feedback I get here. Not so much the ad copy.

Easier starting and more responsive is the first thing i noticed, It does make a difference, I will add that if someone just putts around on their bike and doesnt care about better throttle response, doesn't care about their bike starting alittle easier and doesnt have the right carb tune, porting and exhaust for the added RPM potential, they may be just fine with a stock CDI but if your wanting to get a bit more outta your china girl there is no doubt that the HDs Lightening does add some improvements in my experience with it, its all about what someone wants and if they see any value in having a little better performance.

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