The light show indicates that one of your plug wires is bad, thats probably where your loss of power is coming from, so now you know what to do there.
However, that noise you're talking about perplexes me. Let me see if I grasp this, there is a loud noise coming from the passenger side head towards the exhaust manifold where the bad plug wire is connecting? Or inside the valve cover? That plug wire lighting up like that means its probably misfiring like a bitch anyways, perhaps thats it. I hope so!
Either way, if this thing is daily driven you need to keep your foot off the gas and drive it carefully.
Now that you have to replace your plug wires I recommend getting 'er done right and heading here:
http://www.thunderracing.com/catalog...vid=4&pcid=104
The very first one, "LT1 Spark Plug Wire Kit" - getting over the valve cover wires is going to make your life easier in the future, especially if another issue occurs or you get headers.
I won't lie to you getting those put on is going to cost you a pretty penny, but paying out now will seriously save you headache later. Not to mention give your engine bay that look I'm sure you want.

