I checked my starter cups. The early one with fixed nut is threaded on the lower and blank half way up,So that seems normal. It should just screw straight on with the tri cover washer underneath, and be tensioned up. They do not run an aditional washer that im aware of.
Engine sounds ok. A hone as you said should clear the lip and smooth it out. Piston to bore clearance is .008 thou from memory, but they will still run over that. If the bore is round still and you had to take the rings down a smidge, then that should be a nice fit, and I doubt youd encounter any issues.
Im sure you know, but pins to EX side and dont run a lower ring expander if the rings are as tight as you say. Should be a good little runner.
You checked crank was true yes? They are notorious for slipping halves and elongating/trashing the bore.
Sounds sweet cant wait to see your work
