I don't if this matters or not, just an idea, I was running it w/o the top cover, (so I could check my burn, leaks, and easy access to the carb screws), which is also part of the blower houseing. The fan was essentially doing nothing, might of caused it to run hotter than normal, which in turn made the metal expand more than it should have, decreasing the ring/cylinder wall seal. Long shot, but sounds good in my head.
The "Awsome" chain that came with it, was thrown on the saw, filled it up w/ cold, thick bar oil, cutting frozen Box Elder.
I will pull the muffler and check for scoring, recheck squish, before I do anything, if everything looks ok I will do a cold comp. I'm guessing if its ok I should see at least 155-160. That ring was pretty beat.
As far as the bore goes, I took some light oil, fine sand paper, w/ a light touch, and alot of patience removed the little transfer that was there. I wanted to hone it but....$ A new Medium scotch bright pad and light oil was used like a hone, very light touch let the pad just kinda scuff the bore. NOT THE BEST WAY, but it worked, it runs. The only thought is did I make it out of round?