Dont go over stock timing. There is a thread on here with info about head geometry. I would just go with a stock mikuni or buy one that is already bored out. I would say if your going for a full rebuild. Best to go ahead and get everything done on the inside of the cases done first so you dont have to split them for a while. So tranny back cut and crank rebuilt and welded. Have the cylinder checked out. You can always stay with the 540 and have the cylinder sent for porting and send it out to millennium technologies and have it over bored an plated so it will last alot longer. And not need to be bored for some time to come. I think 196/128 seems to be a good dune port job but the shape of the ports and width is to be determined by the one who is doing the porting. Best to have whoever is doing the porting to go ahead and do the head also. Make sure the piston is cut to clear the transfer and intake ports at TDC.
The thrust washers need to be replace because the stock ones are made of steel and WILL break and when the do they will wreak havoc on the cylinder and head. There aluminum washers being made but you will need to run an OEM small end bearing from an RM250. 99 year model.
Everyone is going to have there own opinion on what you need done. But I think if you want longevity than you will need to spend some bucks.
Tranny is one of the things that should not be looked over. Seeing that so much goes into it, to get it serviced. Why not bite the bullet and get it knocked out on the top of the list?
The bearing pockets are known for going out or coming out of spec for one because the head geometry is off and guys run pumps gas and dont know how to properly tune a carb. ie DETONATION. That will a crank bearing pocket. So spend the money to get those fixed. Think the rate for that is 325 including the price for the bearings.
Pipe would also be goo to get the bike running the best.
Dont forget reeds. Guys say the V2's are the best for the zillas but seeing as they are becoming even rarer and rarer. Just buy some V3's or the newer V4's. Think there are some guys out there modifying V2 cages from other bikes to run on a zilla intake. So that is an option.
BUT you could always just get the head fixed. Replace the broken parts which can be fixed without spliting cases. Get a carb and pipe for it and see what happens.
Place I found with bored carbs
http://www.thecrankshopvt.com/product_info.php?cPath=21_26&products_id=765&osCsid=57ah1kie9oe7ken9qv2u6e88r3This is all my non expert opinion. Just my
