Well, before the piston melt down, to be honest I never used the choke. Living in the AZ heat, I guess I didn't really need it and I never thought of checking how it rides with it on. While riding, it was very responsive and overall smooth, except sometimes when accelerating in 2nd gear in low rpm i would get hesitation but not always. I also never got it to idle quite steadily, the rpms would either be low, or would start surging, no matter how much I played with the air screw.
I did have a problem with the carb overfilling and dripping when the engine was off so I assumed that this is one of the causes for the idleing issues. Tried cleaning it many times with not much result. Now when I had it off and cleaning it again i noticed that there is actually a slot cut in where the needle valve sits, so I guess it is meant to  drip a tiny bit even when seated? I took a small drill bit and turned it in the seat by hand few times, hoping to remove any other build up/uneven parts of the seating surface. Another thing I found out is that my bowl gasket was not sealing good at all so I used some black rtv and closed it. Still need to try and see how that will hold up.

I also noticed that my reeds were sitting slightly open (about 1mm) and I wonder what could that affect besides starting issues (even though it started fairly easy most of the time, 2-3rd kick). I have replacement reeds on the way.

You are right, it will be a lengthy process, especially now that all of these changes are happening: smaller cyl. displacement, new reeds, less leaking (hopefully) carb, decarbonized  pipe and silencer, and repacked silencer... I bet it will be a tedious process. I am still waiting on a replacement bearing to arrive so I can finally put together the bottom end and close it up, so that is kind of holding me behind.

BTW, what difference a 39PWK offer compared to a 36mm carb, considering the boyesen reed valve inlet is only 35mm? It doesn't make sense to me.

Sending you PM right now.