Old Kawi frames seem to be made of a fairly brittle material. A high carbon steel, at a guess.
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19" wheels are legal because 19" wheels have existed since forever.
They weigh less, and the lower sidewall is supposed to help handling. I know Magoo reckons it was a good move on his Evo bike. There's also a few extra choices for dedicated MX tyres in 19" (especially in 125-friendly sizes).