Motorgeek, Thanks for the in depth explanation.
@hotbutta, I've seen that video before too! I thought that was pretty neat myself.
Motorgeek, I started this post because I have an 88 lt250r motor that some kid trashed. It needs a full rebuild and the flywheel looked like it had been beaten with a hammer. My neighbor has a really nice lathe and he turned the flywheel down for me past all the dings and scratches. It looks just like the lightened flywheels you see for sale, but after reading all the replies, I'm thinking I shouldn't try to run this abused, lightened, and unbalanced flywheel that I have. Correct?

I would try it.  If there is a lot of vibration, borrow and install a stock flywheel and see if there is less vibration