I had a 14 hp engine act up similar to that. The static timing was okay, it would start good and run good up to about half throttle. After running awhile cutting grass, it would start hammering, blow smoke and quit. It'd start right back up and then repeat. If I let it sit awhile, it would okay for a few minutes and then do the same thing again.
Turned out the point spring was weak and I guess when engine got hot, the spring would lose more tension and would let the points work as intended.
The points that failed were factory installed by Kohler in 1974. The ran 4-5 years without a problem. The second replacement set is still in the engine.
A new set of points fixed it.
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