Helpon a kz550 rebuild

The first bike I ever bought was a 1980 KZ550C. It never really ran very well. It would cut out when idling at a light after it was good and warmed up. The oil pressure light would come on when the engine was revving low. A couple of times I had wires drop down into the chain and short the battery. Eventually I decided to move on to something a little more reliable for longer trips, but I kept the kz in the hopes of turning it into an around-town bike.

I've already torn down most of the bike to replace all the rubber/gaskets/bearings, but my question is about the engine. It only has 5,000 miles on it. Is it worth tearing down, cleaning and putting it back together? Is that likely something I can do myself? I've got a factory service manual and a Clymer manual already. The size and complexity of the engine is what worries me. I don't want to get in over my head and have to scrap the whole bike because I messed up the engine.

Any advice on doing an engine rebuild would be greatly appreciated. Specifically, I'm hoping there's a list somewhere of everything I absolutely must replace after opening the engine (e.g. I know the gaskets should be replaced at that point).

Thanks!

If it was mine I certainly would not tear apart an engine with only 5,000 miles on it unless something was obviously wrong with it. 5,000 miles is just barely broken in. I would simply go through carefully performing all the routine maintenance on it and then see if it ran well. If it doesn't, I would then perform a leak-down test and a compression check after making sure the valves were properly adjusted. Those tests would show any compression leaks. My KZ650-C1 has more than 60,000 miles on it and has never had any engine work done to it.

When you say "idling low" - how low is low?
Ed