While you have the engine out here is my list of suggested work.
Remove tins and degrease motor.
Remove flywheel and clean the stator with compressed air.
Remove heads and resurface, clean carbon off pistons.
New head gaskets and valve seals.
I suggest this work because the head likely leak a bit at this time and it will be far easier to do it now then to pull the engine again later. I have info for economical head gaskets and valve seals in the parts section.
http://www.onlycubcadets.net/forum/s...ad.php?t=50014
http://www.onlycubcadets.net/forum/s...ad.php?t=50013