Yup, they were fibre, but I ran on alloy for ages without problems to be honest, with a fixed gear and also with one modded to take an atd as an experiment, although I'm back on fibre + atd just at the mo.
Yes, if the mag loses its insulation and seizes up solid bad things can happen - but it's more common for the gear to shed teeth owing to wear and tear, which is a pain. I've lost 2 fibre ones on Beesas over the years, neither through seizures.
AMC twins use steel pinions, sprocket and chain drives are obviously steel (Nortons, Oilfield twins, many magdynos, etc). So are most if not all 4 cyl drive trains. So I wouldn't worry about using a steel or alloy gear myself -there's a lot going for them.
