Chip, the ring gap is .011,on a bore of just less than 3 inches, within specs. These old air cooled engines run loose piston and ring clearances to prevent siezures when run hard.
The machinist said the bores weren't prepped correctly, The boring tool was dull, leaving excessive machining marks and the honing didn't remove them. He suspects the honing was done with a "bottle brush" deglazer, not a rigid stone type hone.Looks like a correct hone job will clean it up, only remove another thousands of an inch.The present piston to wall clearance is .004, with .0055 being prefered for this engine. This photo show evidence of very slight scuffing on the piston thrust face from too tight a clearance probably. Pistons Should be ok with a honing ,fit new rings and hopefully good to go.