Probably so. I see where you are coming from. It has always been my policy
to neither charge for nor sign a logbook when there are unairworthy items to
be taken care of. I see your point -- but I don't operate that way.

In any case, refusing to sign a legitimate annual when the mag switch(es)
were in conformance with the type certificate and the fabric punched at the
lower limit of acceptable strength was unethical in the least sense of the
word.

Jim



Cut from 43.11:
=========================
(5) Except for progressive inspections, if the aircraft is not
approved for return to service because of needed maintenance,
noncompliance with applicable specifications, airworthiness directives,
or other approved data, the following or a similarly worded statement--
``I certify that this aircraft has been inspected in accordance with
(insert type) inspection and a list of discrepancies and unairworthy
items dated (date) has been provided for the aircraft owner or
operator.''
=========================

The annual inspection is an annual inspection.
Whether or not it is "approved for return to service" is the outcome of
the inspection.
No other inspection is necessary for the next year.

91.409
=========================
Sec. 91.409 - Inspections.

(a) Except as provided in paragraph (c) of this section, no person may
operate an aircraft unless, within the preceding 12 calendar months, it
has had --
(1) An annual inspection in accordance with part 43 of this chapter "and"
has been approved for return to service by a person authorized by §43.7 of
this chapter;
=====================================
The big word here is "and" for allowed operation of the aircraft.