500$ for a Piston and piston rod is a little bit too much, you get them cheaper, http://www.seven4racing.com/motoshop.htm
Anyway for a rebuild you still need some money, much patience and a lot of time, I'am too rebuilding an early water cooled 500cc KTM bike (1989) and the rebuild is now in the third year.
If you get one of these bikes that have a road registration, rare in the US I believe, very rare in Europe a rebuild is
worth the money in my opinion.
It can be btw. cheaper just to ask KTM dealers if they still have parts lying around. I had a blown engine too, needed a piston con-rod, all bearings, a clutch basket, primary gear, engine side case, new radiators, ... even the cylinder had to be bored, (the engine has a steel sleeved cylinder).
Still the rebuild is not completed ...
In my personal view the 500cc bikes of the mid 80's onwards are really brutal in power output, they are perhaps best for riding in the desert. For MX, (not my interest an additional flywheel weight will soomth the power output). For trail and woods, (which I ride), reducing the power band at top rpm for adding some horses at low rpm and an undented pipe with an additional good silencer is the way to ride these bike comfortable.