The switch in the handle is a GROUND that activates the starter relay. It also grounds for the brake light. I can not figure how it would kill the engine unless you have a bad ground on the cdi/stator. I would check those grounds, as well as the engine case ground, and battery ground. My thinking is the switch is acting as a ground for the engine while it is held in. By passing it will allow a false ground to control your engine, and eventually burn out.