I agree with posters on rust not affecting the ability magnetic field. However, lets review what rust is. It's the break down of steel/iron due moisture/water. This is why when the rust is cleaned away, the parts shows as pitted. The breakdown is composed of fine particles of decomposing steel/iron, which does affect the engines ability to start or make a spark. The accumulation of rust/fine particles can easily be enough, reducing the air gap to the point grounding out the coil, just like the ground wire would. It seems odd to me that many engine manufacturers have modified flywheels so the magnet portion is raised, in some cases quite a lot (Kohler CH Series). Just my two cents and 40+ years repairing!