typically dynos use some sort of drum. matched to certain a degree of the expected hp of what you're testing. the engine or car is hooked to it in one form or another. the engine or car turns the drum from one given rpm to another in X amount of time. using the formula which I have no idea what it is. but Im sure Dyno would. you can calculate the hp it took to get the drum from one rpm to another in the given time. i think you can calculate the torque with this too. but the formula differs. of course Im not engineer so don't take my word for it. but thats what little I recall from looking into this subject once long ago.
Steve,
I have seen the type of advance you are talking about. as I recall it was not fancy or pretty but it was functional. I was thinking something more akin the the chevy vacuum advance found on their older distributors. wouldnt be hard to make. I would make it so you could adjust the max advance it would give you. via a set screw to limit the travel of the advance plate which would have the hall sensor attached to it under the flying magnet disk.