Update: Well I managed to break down this entire engine. It was pretty clean inside, but never the less I ended up honing the cylinder, installed new rings, lapped the valves, checked/reset clearances, gaskets and an overall thorough cleaning. Oh, I also made the breather hole just ever so slightly bigger. I also replaced the carb. I used conventional oil for a break in period of 30 minutes and got some nice glittery oil. Compression was at 125PSI. I’m just trying to fine tune the RPMs now, but was unsure of the linkage. Specifically the top of the control arm with only two holes. No oil issues anymore. I dove deep into this head first, but feels good to do something I’ve never done before. Anyone have clarification on the exact linkage setup on this engine? Does it matter if it’s running normal RPMs whether it’s in one hole of the other?
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