Hmm...where to start? (Do you have my book? It covers this whole thing in great detail...).
The ring gap numbers you show are at the wear limits. This means the bores are also at their wear limits for that piston size.
Here is what your machine shop will NOT find, as they don't know to look for it: the outer 2 cylinders (1 & 4) are now egg-shaped, if you imagine the blunt end of this egg toward the outside front corners of the cylinders. This is due to having too much cooling on those front corners of the engine, as compared to the rest of the block. The block and liners are now cured, however, and a step-bore with good rings (and oil) will last 100,000 miles - I just did 80k miles of that with my own 750 since 1980, tearing it down for other reasons in 2013.
Next item: you can merely lap the valves, if the guides are not worn, and reinstall them to create a new, tight seal. These engines always lose compression thru their valves when parked for a long time, and they also always recover that compression if simply run for a while afterward. This is because the valve seats are cast iron and the valves steel: they polish each other when running and rust a bit if improperly parked for a long time.
If you just re-ring this engine with the numbers you are showing, it will not last a long time. Typically these will run 8k-10k miles if re-ringed, then they lose compression and often start using oil as well.
In your signature you indicate a 1978K bike: if this is the engine, here's some more things you need to know about it:
1. It has [cheap] cast-iron valve guides that typically last about 10k miles. Replacing them with bronze guides will likely make the bike outlive you!
2. It has pistons that are specific to the K7/8 engine. CruisinImage (and I) have pistons for these. You can improve on the CI rings, though, by getting some RIK or MC brand rings. A step-bore to 0.5mm oversize is likely the best thing you can do with it.
3. Here are the important clearance numbers to know for the rings & pistons:
Ring end gaps for top and 2nd ring: 0.004" minimum.
Ring end gap for oil ring (thin-section rings): 0.008" minimum.
Piston-to-bore clearance, measured at the front or back of the lower piston skirt with the top of the piston at top-of-bore:
0.0006"-0.0012" MAX. I build them at 0.0008" bore in all engines today. Most car-oriented machine shops will NOT do this tight work: find one who will, as they are not used to working with these types of engines and car pistons are typically 3x-4x looser than this in their bores.
