JERRY - WOW, That's a lot of blow-by.
Funny but true story. SON was helping a group of guys build a 358 CID 351 Windsor V-8 for a Mustang. Some alcohol was involved. Son was installing the rings, spacing the end gaps, hand-pressing the wrist pins in and installing the keepers and handing them to someone else to install into the block on the engine stand. Somehow ONE of the other guys decided to remove the rings from one piston and set them aside out of the way and the piston got installed without ANY rings on that one piston and no one found the rings until after the engine was installed & run in the car. The engine still ran O-K, smoked just a bit just like most freshly rebuilt engines. Think the one cyl. without rings still made 85-90 PSI of compression warm. The others were in the 140-150 range.
What I'm getting at here is, I don't think you would have that much blowby on a K321 if there were no rings on the piston at all.
I'd pull the engine, remove the pan, flywheel, blower backplate, piston & rod, crankshaft, bearings & seals, of course the carb & muffler.
Have a good small engine or automotive engine machine shop lightly hone the bore to restablish the proper cross hatch, they can also measure the bore for wear, out-of-round, taper, etc. then install new rings on the existing piston, which also should be fine. With only 200 hours the bore should be fine then. Also inspect the piston & used rings. There might be a broken ring or two.
The conn. rod & rod journal should be O-K, but measure or have the mach. shop measure to make sure. The new Kohler rods use a "Posi-Loc" rod bolt, they're supposed to NOT be reusable, like torque-to-yield bolts. I don't know if a Kohler parts dealer can even get just new bolts & nuts. Maybe one of the sponsors above could get you a pair. Then reassemble the engine with a whole new gasket & seal kit. Worst case you could buy a pair of ARP rod bolts of the correct size & length! I forget the reason why but I had to remove the wrist pin keepers on one of the engines I rebuilt several years ago, think it was the K181 on the lawn vac and I had to "Special Order" the new keepers which the manual also say are "Single Use items", remove and dispose of ONLY. My dealer said they had NEVER had anyone ever just buy new wrist pin keepers EVER before. I always dislike it when parts people tell me that! Means it normally costs more, I have to wait longer, and that everyone else is NOT following the manual.
I think it was right around the time you got that short block that Kohler stopped supplying any kind of K-series assembled engines at all.
