So this thread died in the ass and in the meantime I've rebuilt the top end. Seems to be showing good signs after 3 short running-in trips - 5-10 minutes, 10-15 minutes and 20 minutes respectively. It was a warmish day for the 20 minute run and I gave it a really good warm up before heading off. Usually it would start showing signs of seizure pretty quickly - the loss of power, the bogging down, the stammering - in these conditions but no signs even with it nowhere near run in. Thanks for the unanimous diagnosis, chaps.
I can't wait to do a decent little ride on the flyer since it is spring down here.
On to the next problem:
Previously I was loosening the tank cap because there is a definite cap venting issue. Any advice on cleaning up those vents in the cap? Pull it apart (if possible) or just spray some WD40 or something down the vent holes and give it a good flush?