go bigger on your pilot jet like jasonp said pilot 0 to1/4 is the pilot jet nothing to do with the main jet that is higher rpms that kicks in. i had the same problem with mine. mine was glowing so bad you could almost see through the pipe i think i went to a 50 pilot jet and problem sloved
maybe a heli coil drill it out to the right size and tap it and then thread in the heli coil and you got brand new threads. you might want to check the exhaust to make sure it is not bent puting to much pressure breaking the bolt.
i think ya got a great thing going here. where can ya find a a-arm with that many adj. on it. no where unless it is home brewed. i wish i thought of that when i tried my hand at makeing some a-arms. some times the best things made are home made.
your valves have alot to do with oil they have a seals they ride on. they are called valves seals. the rings are probaly not your problem. if i am not mistaken blue smoke may be gas and not oil. i would pull the plug and see what it looks like.
the bad part ratchracing is the people i got it from had it out and ain't no telling how long. i was kinda hoping it had to do with no oil pres. to the top end. i am going to check the pump. thanks for the help.