Now that's an interesting beast happening there silverfox. Being a Honda man, I can't wait to see it finished.
I reckon having the XL swing arm there might be a problem. They are very short making the front of the bike want to lift all the time. Great for wheelies
As for getting the motor to go, I have a '79 XR 500 and all I did was put a 40mm Mikuni on it, 1mm larger inlet valves, A high lift cam (can't remember the lift but it wasn't the biggest available) and a High comp piston (std bore). It goes well enough for me without spending too much money on a big bore and everything that goes with it.