Well, everything's back together and I flew the new machine for about a half hour today until the winds picked up. This time all went well; the biggest problem was a spotty idle, which should just be a matter of some tweaking. No bearing problems this time; I suspect the bearing got dirt in it either when it was on a bike, or when it was in storage... when I got it it was covered with dust and no carburetor on it; though I cleaned it out when I had it apart there still may have been something in the bearing.
Strangely, it wouldn't run right with any filter, even a simple screen, directly over the carburetor. Of course in the air I don't need anything like the filter you'd need on a dirt bike... some don't have filters at all. Adding a 12" length of car radiator hose to the carb, with the screen over that, worked fine and even seemed to gain me a couple hundred rpm... perhaps it smooths out the airflow. A bit quieter too... though it's still a noisy beast.
I also bypassed the powervalve this time... I left the flapper and wedge in place, but I machined a block to fill the compartment on the cylinder and block it wide open, and I also removed the centrifugal governor and linkage from the crankcase. As far as I can tell there's no difference at all at high or low rpm's, throttle response is fine... low end torque isn't an issue with a propeller. One less moving part to worry about!
I'll probably pitch the prop a tiny bit higher... in flight rpm's were around 11,300 at full throttle, not too bad but I wouldn't mind getting it down around 11,000. Power is very noticeably better than my old 15hp machine, so I'm a happy camper. :)
-Dana