I've had a couple of SC500 Yams over the years...one a stocker, the other in a Champion frame. The engine in the Champion had been modded in the USA back in the 70's and worked a treat but handled like a bucket of shite in the flexi frame. I had some problems with the pistons cracking around the gudgeon area so I welded up the little cutaways next to the gudgeon and that problem disappeared. I also fitted a rewound points magneto (can't remember the details). I sold the Bike to Edgar Phipps who braced up the swingarm and fitted a very trick engine with a CR500 Honda piston in a new sleeve and a 5 speed trans, with out the omni phase balancer bullshit. That basic engine in a stock frame and road race wheels topped 120mph at Bathurst with Brian Clarkson on board back in the 70's so getting serious performance out of the big lump isn't impossible...you just have to know the tricks. A 38mm carb on methanol a modern pipe and V Force reeds work a treat at well.
I saw the YZ500 of Lawsons a few years ago and I must admit it's a nice swap. Because of the rarity of the YZ frame it's probably not a sensible swap these days.