550 engines that will fit on a KZ650 frame

I've picked up a second KZ650 for a long-term project that's awesome in every detail, except it has a bad engine (dropped a valve, killed the piston and cylinder; guy says it had a bad gearbox, too).

I know I could pick up another 650 engine for it, but, I'm thinking about going down to a 550/4, and make it into a super-miser MPG bike.

Which 550 engines will fit? With fuel economy as the primary concern, which 550 engine would be best? I'm figuring I'd want one with a factory electronic ignition. I've read that the carbs on the 550s were crap, but, didn't that change with the later GPZ550s? I have a friend who has an '84 GPZ 550; I'm pretty sure he said it has CV carbs. Does it?