[Serum]

It will not harm your controller, and i am curious who told you that? Or did you presumed?

That spiking is the result of the low 0 volt-resistance of the capacitors that are on the controller. It will NOT harm your controller in ANY way. The only thing that is hurt buy this spiking are the plugs.. those CAN hurt your controller when they are in bad shape. (ask Schulze :D ) The peak voltage from the spikes are buffered by the capacitors enough, to save your speedo

An on-off switch does the same as the wires connecting to each other. it would also spark, but you would not see it, because it's inside the switch. Like Ryan says, you do need a very solid switch. Don't go there.

If you want to spare the connectors from the damage of the sparks, connect a crappy and easy to replace connector OVER one of the battery connectors, so that that 'easy-to-replace-throw-away-connector' will take the damage from the sparks.

With brushless you need the to shorten the cables to a minimum too