The piston looks bad. I agree with that....... I think some carbon let loose and caused that.... The cylinder looks way better than the piston does....
Can you feel a lip from the inside of the bore to the very top of the bore ???? If you do then the cylinder might be worn and a 20 thou bore might be in order if you wan't to bring it back up to speed....... You can have the bore checked with micrometer and find out out for sure.......
I like those older Honda engines. They hold up well ............
Plus Tard Mon Ami ~!~!