This might sound a bit rough and I have not tried it on a small engine but here goes.
On my 253 holden v8 I had a crack in the head that leaked water into no.7 and made it bubble up and lock solid, it had sat there for a few years.
I pulled the heads off, put a liberal amount of inox into the cylinder and rocked the main crank bolt side to side with my breaker bar. eventually I got the piston to the bottom of the bore then I sanded the rust down and the thing not only turned smoothly but had good compression.
As rough as that remedy was the engine is still a great performer today and I didnt even pull the bottom end apart.
