I've questioned that once and the way I see it is many a 60s, 70s and 80s cars ran a carb without any marine equipment and never burnt down from fumes, and for a fact my engine on my floater is WAY more air'd out than any doorslammer. Not to mention my engine is n way better shape of a tune compared to a daily driver..ex no spark wires arcing across engine parts etc. So I'm not buying that idea, if you have a wide open engine on a boat it has plenty of air out room.
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Touche' Ray! Hope those people got out ok, amazing how long a boat burns isn't it?

65 gallons of high test gasoline under my ass with a sheet of plywood and a layer of carpet between the gas and my ass - fire is my worst fear in a boat, even if you get out of the boat there is always the chance that the gas will spread-out and still get you.

The distributor has to pretty much be airtight to keep it from igniting gas laden air that might have entered it - pretty much waterproof too even if that wasn't their primary objective. Car starters and alternators hate being in a very moist environment, much less being occasionally submerged.  Even if you don't have a fire, I can pretty well promise you that after a few years those parts will look like hell, if they still work.

Back on topic, I'd bet you don't have a BAD distributor but the art of setting up points ignition is a lost art, back in the day we even had to look at it's operation with an oscilloscope. Gap, dwell, resistance, follower wear, weak spring, pits, etc... A modern electronic system (I'm partial to GM style HEI) will be much easier to tune.