That's not strictly true, the resistance in the lead can go sky high and stop the current from flowing to the end at all.
Most leads are now made with a carbon conductor which can break down over time and stop the passage of electricity, even if the insulation were to break down its unlikely that you'd see it arcing all over the place" as the insulation would have to almost disappear entirely for the spark to pass through it.
Most faults occur near either end of the lead where the connectors are, try pulling the lead off of each plug with the engine running, if when you pull of a lead there is no difference in the speed/note of the engine then you have found the faulty cylinder. (use insulated pliers).
Also check the plugs, see if they have a brown ring around the porcelain where it meets the metal body, this would be a build of of metallic oil which can lead to something called the corona effect where the spark travels along the outside of the plug and down to the block, this can be almost impossible to see actually happening.
As for looking at the engine at night and seeing some sort of light show that will give away the faulty part, its very very unlikely.