Someone trying to help you suggesting the mods being the reason sounded good except for the fact that the mods would not make your reverse light flash. The black wire suggestion is closer to home. Yamaha has a black wire with white tracer in the harness. Goes back to the CDI also. This wire being disconnected should disable all safeties. Now to test quickly and determine which path you are on, electrical or mechanical mods/problems, put a test light on the hot wire feeding the ignition coil. See if the light cuts out at the rpms that the engine cuts out. If so you found it to be electrical otherwise it is mechanical (doubtful tho because of that reverse light). You really need a Yamaha Ignition Mate meter to check the stator and pulse coil. Normally you check to see if the pulse coil is putting out 2 to 5 volts and the stator puts out at least 16 volts while cranking the bike over with the spark plug out. A digital meter won't work. Not fast enough response. You can get adaptors for a digital meter from Yamaha. Cheaper than replacing those expensive components. You would know if you had a bad CDI if it is not supplying the ignition coil input(primary wire) while it is still getting a signal from the pulse coil and also voltage from the stator. Stator has 3 white wires. Voltage should read across any two of the three. Pulse coil is one ofthe smaller connectors right next to the stator connector. See your manual. Now a check for a possible shorting stator is checking for a constant output when the bike is revving to its symptomatic cut out stage. See if the pulse coil is also still sending a constant signal. Both stator and pulse coil should. If the coil primary is getting a good constant signal but the spark is erratic well you know it is the ignition coil. (You can even speed up an overheating coil problem by exposing it to a heat lamp. Be sure it is grounded properly bla bla bla. I still don't trust the reverse light switch and wiring. I would really snoop into that as one person here suggested. Check your whole circuit over really well.

 

your damn right the black wire connection is a good idea, im tell you thats what it is, also a possible the outside conduate, surrouning the wire could have been rubbed off, and is now grounding itself on your frame. bottom line your computer thinks its in reverse, hence why the popping(WHICH IS ACTUALLY, YOU BOUNCING OFF THE REV LIMITER) its not jets trust me. you have a problem with you reverse wire