Reducing the resistance in the arc is actually a bad idea - low resistance in the chamber is what ruins the performance of many amateur ETGs. It is, unfortunately, not a good time of night for me to be getting into plasma physics, so suffice it to say that one wants a plasma with as much resistance as feasible, but no more. Too little resistance, and not enough energy is dropped in the chamber as kinetic energy of the plasma. Too much, and the plasma will either not form at all, or be insufficiently hot and energetic to ablate the propellant properly. Increasing resistance, for a plasma, means decreasing temperature, or increasing a few other variables which I've not been able to positively identify yet (I'm certain of a density dependence, and would guess it to be in direct relationship to resistance). Any direction on this topic would be appreciated.
Assuming that I'm correct, the relatively low pressure plasma formed at the switch contacts has very little resistance compared to the high pressure plasma formed in the chamber, and won't be the source of very severe losses. Just how much? Your guess is probably as good as mine. The texts I've found on the matter are too far out of my depth for me to generate any real solid numbers. Eliminating switching losses would improve performance for a given capacitor bank. I can't tell you by how much.
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Without a "fuse", one would be relying on dielectric breakdown in the gas in the capillary tube occurring before dielectric breakdown somewhere less desirable and repairable. By using a fuse wire, there will always be a very low resistance path through where we want the current to go, simplifying design somewhat.
These have been some interesting questions. To anyone looking for a better understanding, Introduction to Plasma Physics (by R. J. Goldston and Paul Harding Rutherford) would be an interesting read, as would a few other such texts. Don't let the title fool you though, it's nearly indecipherable to anyone short of at least a second year physics course

I'm trying to develop a better understanding of some of these issues in between schoolwork and other tedium. I'll keep you posted if I come across anything new and interesting.