Yeah it happens to all of us. Don't feel bad. 4 thou on #1 seems excessive as the books minimum is 10 times less than that. 25 thou on #2 might be workable but i think thats getting out of spec as well.
I try and measure at different points in the bore to get a handle on how tappered and out of round each bore is. In both 0 and 90 degree directions at the top, middle and bottom of each bore. Then make notes of your clearances measured as this can tell you a lot. Draw a picture of it so you can get a handle on how each bore looks after taking some measurements.
I had 2 different cylinder blocks to play with, one came out of a bike with low miles & was really good & ended up using this in the end. My original one was way out of round and tapered & was blowing smoke continously, the rings had had it. On the good cylinder, i just gave it a light hone. All your really wanting to do is take the *minimum* amount of material off to remove the existing glaze and apply a cross hatch to retain oil and also to allow the new rings to bed into and seal properly. The use of the hone allows you to keep the grinding action true in the bore, but you only need to use it in a minimal way. Everyones got their own take a style with these things.
I know some old folk that used to race. They would deglaze/hone the bore by hand using emery cloth, they would not even use a hone just so they could be real gentle with the bore. I'm not saying to go to this extreme either, but there was some wisdom behind this. Remembering that the only difference between a good engine and a bad one is 'tolerance'. Once a motor gets excessively sloppy (out of tolerance), its called 'worn' and behaves as such.
I'm not that picky with the ridge unless its excessive. There are different schools of thought on it. Of course getting rid of it all together is the best, but i think its more important to look at the state of the bore in general & skirt clearances before getting hung up on the ridge. A lot of mine honed out so i didn't really have a problem with it, but i've done other motors (mainly with cars) with ridges that were a bit pronounced and still didn't end up having problems with broken rings, etc, after many years of driving after that.
Worst comes to worst, you could:
(a) try what you have
(b) source another bore (std size if thats what yours is) and measure against that. There might be some good ones still findable.
(c) get a piston kit and rebore, next size up or a 836 kit (better)
I personally think you have overcooked #1 so would avoid (a) if possible. If you reassembled it as is, you could probably ride it, but it would be iffy how much life you got out of the motor due to future issues with #1. You could do it if you got desperate.
Option (b) is a better way to go. You might be able to source a decent cylinder block on the cheap thats not that worn.
Best option is to go for (c) if possible and you get some more ponies out of the motor as well & benefits of increased compression as a side dish (and get to reuse your existing cylinder).
I've just put on 2000kms on mine since doing a light hone & reusing my std pistons. The bottom end was fine, so i didn't need to touch it. The bike runs like new, there is no smoke coming out the back and its using no oil. Most running in happened in the first few hundred kms. After rebuilding, i did 1 start-up sanity check, then on the next startup, I was ready to take it for a ride to give the new rings some load. Gave it medium revs, but climbing hills and backing off to allow for cooling. After 20kms, dumped the oil and filter (heaps of metal shavings came out here - most of the wear occurs here because everything is fresh), then installed new oil and filter. Did the same after 500 kms (less but still a significant amount came out here). Just checking my oil now after 2000kms and there is only very little 'glitter' to it, less than before, so most of the wear-in has occured. My piston-to-skirt clearances were around the 1 to 1.5 thou mark and I remember having a ring end gap of 11 thou from memory, so it was all pretty good. I just relapped the valves and installed new valve stem seals. Everything up top wasn't too bad. I'll keep oil changed regularly on it and expect to get a decent life out of the engine. It redlines nicely.
Good luck and i'm sure it will come good for you.