Depending on the actual current flowing through the switch contacts, a voltage drop of 0.03 volts could generate enough heat to make the key and switch hot.
For example, say there really was a current flow of 25 amps or more (I think that is unlikely but some accessory/equipment combinations MIGHT draw that kind of current), the power dissipated across a 0.03 volt drop would be 0.75 watts. OK, not a lot. Until you consider that the 3/4 watt is being dissipated in a small area for an extended period of time. If you have ever been unfortunate enough to touch a hot resistor while trouble shooting electronic gear, you can appreciate what 3/4 of a watt can do. Especially when it is occurring in a small device like a resistor.
It doesn't take a lot of power to make something small hot. That's one reason relays are used to control higher current loads - So that the ignition switch doesn't have to deal with them.
If my switch was getting as hot as you describe, I would be concerned. Not necessarily panicking but concerned enough to have it checked out. Heat is not a friend to switches and other electrical components. Heat is the primary cause of device failure. Proper design costs more but when things are designed well and the components are chosen conservatively, the equipment can last virtually forever. One way to do that is by making sure heat is controlled and minimized.
Last edited by Festus; 12-29-2014 at 04:56 PM.