if you have checked the wood draft key and all is in order in the timing depo,
i would say its the crank seals!!
sounds spot on symptoms after reading what you have said,
providing when you strip the barrel off and all is in order an the piston an rings are ok dont worry if there is some wear,
ive had two strokes run with a chunk of piston missing!! didnt eaven no there was a problem lol,
but if all is in order there i would split it and set to changing the crank seals
let me no if im wrong or right!!