Here is the report from the mechanic...
" On the left Cylinder their is evidence of a possible bent valve and or collapsed valve spring also this cylinder has oil above the piston which is also a signed of possible blown rings. Their is also substantial dabree in this cylinder such as small bits of metal and a lot of carbon, this cylinder also appears to have been inactive for a little bit due to the carbon build up on it their is also some scoring on the cylinder side walls as well.
On the right side cylinder the the cylinder seems okay but it has been burning slightly hot their is evidence of detonation at the top of the cylinder their is a little bit of scoring on the walls as well but not as bad as the other one the left.
The bike will shift into gear but it will not rotate at all meaning the back wheel or motor is completely locked up also the bike has a small oil leak as well."
So the engine is toast from what I read. However, I picked up a 82 r100 frame, engine, tranny and drive train from ebay for $950 and I'm gonna port everything over this winter. Should be a fun project.
Gonna have a ton of /7 extra pieces this winter so be on the lookout.