From Texas...my [sad] experience is that when the exhaust (and/or intake) ports are left open that long, the cylinders rust to piston-lockup stage, requiring a rebore. The valves are usually rusty, too. The good part is: that serial number engine has Stellite valve guides, so they will likely be fine! That's the expensive part of rebuilding a head, when those must be changed out. From a performance standpoint, the K1 was a streak BEFORE it was built up, too.
Is either frame titled? I'm in need of a titled frame in the K1-K4 range as I have a complete bike with 'lost' title, which Colorado will not retitle, period.