There seems to be a dichtomy here: dark piston crowns with a holed center and missing electrode on another plug...one seems to indicate rich, another indicates preignition....also, the fact that it is an SOHC4 engine with a hole in a piston: save that thing - that's rare enough to be of value!
Hmmmm...
My first reactions are:
Which plugs are you using?
What is the ignition timing?
the jetting you describe seems about right, certainly not far enough off to cause this by itself. But...if you have a leaky carb inlet (those 30.8mm O-rings in the metal tubes that connect the carbs to the head), the carbs will run a poorly atomized mixture that will not burn well, leaving soot behind, but knocking because the heating is very uneven. Typically, the mild swirl the charge receives in these engines will prevent some of the knock, but if the mix is not aerated it will not burn well, anyway.
So, here's what I would do, if it were parked in my driveway with the other 3 CB550s at the moment:
1. Pull off the float bowls and emulsifier tubes and look VERY closely at the emulsifier tubes. See if the holes are partially blocked with a calcium-like material, which comes from the years of letting the bowls dry out, then filling them back up, but never cleaning out these important tubes' holes. They are small, on the order of .025" to .031", and can stand to be [considerably] larger, so at the very least, poke through those holes with wires, at best with drill bits until you start removing metal, to know you are not just sraping away those almost-invisible deposits. If I had $5 for every SOHC4 bike I've fixed this way, I would not have a mortgage...
2. Repeat step #1 with the idle pilot jets. they are just miniature emulsifier tubes, too.
3. Remove the inlet castings to the head and install new O-rings. These are the same size as are found in the valve caps, 30.8x3.5mm (you can get the 31x3.5mm to work: I have a whole bag of these here). Look closely for cracks in the casting on the one where the piston is holed. A vacuum leak here CAN cause this problem: the affected cylinder and the next one in the firing order will both have sooty chambers, yet the leaky one will knock when running at 2500-4500 RPM (on any of these bike engines), because the slowed air in the carb is still trying to mix from the idle circuit, making a "clumpy" mixture in this scenario. This mixture will not burn well, making a very hot cylinder as compared to the others. (I devoted an entire half-chapter to this phenomenon in my book, wrote that part just last month!).
4. Check the timing components: bad condensors can make weak spark, which will let unburned fuel build up in a cylinder, then fire at erratic intervals when the fuel that is trapped in that carbon finally gets hot enough. This create a very hot piston crown. On a twin bike, this appears as a popping cylinder: on these Fours it may not be so noticeable because the engines always sound pretty busy anyway.
