I don't know if 2nd over will clean it up , those pits are deep.
I don't think 1st over will do anything, the pits would have to be about 4thou deep max.. a hair is about 3 thou.
I was looking at those rust areas at the top of the cyl..
May need to get another cyl, Ebay.
The next model/yr., 1981' CB125S uses the exact same crankcases as the XL185S.The spigot where the sleeve fit's is(70mm i.d. across) much larger.You would be able to build that engine into an XL185 very easily as you'll probably need to replace that cylinder and you could use the same head.There is a cheap China cyl./piston kit(some of them come through having slightly tight final clearance:a quick pass with a Quality Sunnen is all it needs to get it to.001" spec) on Ebay:61mm piston and cylinder kit,145cc and usually goes for about $60-70.
That 1980' model has the small spigot.Would you measure across that crankcase spigot/mouth just to see exactly what it's dimension are ?