There's nothing natively wrong with Hall effect sensors, or distributors. They're limited, for sure (you're pretty much stuck with the advance curve built into the distributor), but a well made distributor and pickup can be dead-nuts reliable
... which is not the case with 99% of the VW aftermarket. Most VW distributors are to OEM-grade stuff as a set of EMPI IDF copies are to actual Italian IDFs.
This is actually a pretty good comparison - because yes, while EFI is way more adjustable and better by every possible metric than any carb, well set-up carburetors are near-miracles of the mechanical age and do very, very well. The copies can be made to work OK-ish in the right hands by the right people sometimes, but they are pretty much garbage out of the box.
So, while EFI is just clearly better - a set of nicely made European (or domestic, in the case of the old V8) carbs can be made to be very, very nice. A set of east Asian copies, not so much.
That's the issue with distributors and especially with available Hall effect pick-ups. Yes, there's slop in the drive, but this was almost imperceptible to tuners back in the day, and won't make a difference to 99% of hobbiests. What is awful AND easily perceptible is how shabby, unpredictable, and altogether crappy the advance mechanisms of the Pertronix distributors are, and how ridiculously irregular the Pertonix Hall-effect pickups have become. A better distributor with a better made pickup would be perfectly acceptable to most people, and is niche CB Performance is trying to fill.
123 ignition is trying to do this as well, but part of the issue is how much stuff is trying to be crammed under a very small distributor cap. The larger bodied aftermarket distributors have a lot more space by way of comparison.
What most guys really need is the old, dead reliable, domestically produced Mallory Uni-Lite with a locked out advance mechanism tied to a CB Black Box (with an updated software package, written for something newer than Windows 95, or whatever it is).
The Magnaspark is reputed to be pretty darned close.