Yes you need to run 10 gauge between the switch and starter. The 10 gauge wire is a fail safe size some have run 12 gauge, but that may fail under some high performance or load conditions. I failed to run 10 gauge all the way to the switch. It worked great for about 5 years and then smoked taking the wire harness with it.
I haven't worked with and external coil in so long I won't comment.
This question has also come up on stovebolt.com many times.
Larry
