UPDATE:
Got the motor torn down today. Found a few things of interest.
1. Those are the cutest little pistons I've ever seen!
2. Found that the pistons were a scuffed up (one worse then the other) The tops were real packed with carbon too.
3. Rings were OK (not too worn actually).
4. Cylinders were a little marred, but not bad at all. Could be oval'd though
5. The valves are SUPER full of thick, black carbon deposits. This is where the oil was coming from or sure, it's a wonder that this thing even combusted at all.
I'm dropped off the head and cylinders to be service at Kon Tiki Motorcycles (these guys are kick ass with old bikes. Check them out, they have a full machine shop there too, everything is done in house.)
http://www.kontikimotorcycles.com/
They're gonna go the .25 overbore, I'll buy the pistons and rings new (anyone got any before I go to Ebay?). They're also gonna do a full inspection and ultrasonic cleaning of the head before lightly lapping the valves. If I need new valves they'll let me know (but they don't think I will).
So that's about it for now, the crank, rods, bearings, bottom end looks real clean, the rods play is in spec.
The only thing I have to do now is see how I can make the clutch pull smooth again. It may just be that I needed a new line, but it was too tight before tear down.
I already dissembled and cleaned the clutch plates, I think it's in the shaft or something (or these are just tight to pull? Who know I never pulled a new one to reference too, but it's WAY tighter then my Yamaha YA6). Any suggestions on that front?
Here are the pics...