Postmortem on the latest engine:
The RTV should've been the tip-off! Trying to find a virginal 40+ year old engine is like trying to find... well... a 40+ yr old virgin! After many measurements and re-measurements and a a few beers to dull the pain, we've determined that in addition to the out-of-round #1 crank bearing seat, it looks like the entire crank had been previously re-ground. All the crank pin measurements are well under the minimal Honda spec, but are all within .0002" of each other. I need verify, but it also looks like all the crank bearings are over-sized - even beyond the thickness of the Honda 'black' bearing specs, but I need to wait for my more-micrometer-savy brother-in-law to come by and confirm this to make sure I'm looking at this correctly. Went ahead and did the plasti-guage thing anyway and found the connecting rod clearances were not bad, but the crank bearings are at the high end of the limit. Not acceptable.
Now to determine next step(s)...
Option #1 - Tear down the remaining K1 salvage engine and see if it's worth it to have the front sprocket patch properly repaired (AFTER confirming the crank is at least close to spec). This is slightly attractive in that it again gives me a K1 motor in a K1 bike, making the resto more correct...
Option #2 - Tear down the K3 Salvage engine and start all over again with that. Again, I'm saddened that it takes away from the 'correctness' of the project, but is still a viable option...
Option #3 - Go hunt for another K1 motor (but they don't grow on trees...)
Tell me again why I started this project in the first place?