As the old saying goes there's no replacement for displacement. Compression counts in there as well. When taking the cylinder apart, i discovered what was causing the low compression. The flywheel side gudgeon pin clip had come out, and the pin was gouging the wall of the cylinder. I found three pieces of the clip, the others must have escaped via the exhaust port. No more pieces were discovered when the engine was fully disassembled.
The goal was a simply to install the DR130 kit, but upon discovering the damage, the whole engine had to be taken apart. The gearbox was dirty, and the retaining nuts for the clutch and pinion gear were not torqued down.
Saved again by Scooter Mercato a gasket and seal set came within the week so that progress could continue. Unfortunately when starting to put things back together the head studs did not cooperate. I don't know if they were a bad batch, or what. I could not get them to torque down, they kept getting more loose. That could only mean one thing.... they had stripped. Despite being nicely lubed, they still stripped at less than 10ft-lb. I complained to AZScooter Parts where I got them from, but it didn't seem to make any difference. They said it was longer than 30 days since I bought them and shut me out. (It is rare than a well planned engine rebuild is completed in less than 30 days, especially when I bought all the stuff at the beginning of the summer and rode all summer.)
I bought another set of studs from a different vendor, but when the studs arrived they were the same brand as before. I was not going to be duped again. I decided to case-harden the threads by heating them to a nice cherry red and quenching them, twice. They seemed to be adequately hard after that.
Assembly went smoothly. I decided to maintain the cylinder head temperature sensor, but didn't want to be bothered by the sensor under the spark plug. The solution was to put it under the nearest head bolt. There was very little space available to get the sensor and the torque wrench in there. The solution was obvious... the smallest piece of casting fin between the head nut and spark plug was begging to be broken off. So I just got in there with a set of pliers and snapped the sucker off. Now there was plenty of room for the CHT sensor.
I had chamfered the cylinder openings carefully by hand. The ring gap clearance was in spec, the squish was acceptable, and this time everything torqued down properly. I will welcome the extra displacement and some good compression. A few little details were added. Any place that the head shroud was fastened to the engine, I added a collar to the 6mm bolt. This way there was a place that the bolt would torque down metal-to-metal, and not just on plastic. I had done this on my Stella engine, and it worked well.
The other detail was the shift mechanism cover, that I have never seen on a smallframe in the wild. I got one cheap on eBay from India, but the mounting hole was in the wrong place. I don't know if it was intended for a different engine model, or what, but drilling a new hole was easy enough. The side where the neutral switch was located had to be notched out as well. The original hole and standoff stud were easily removed and plugged. Hopefully this keeps dirt out of the shift mechanism.