Belching oil from top of engine (breather) and lost power

Cheers guys. All good points, and clever tests but regardless what the tests show, the head would have to come off. And with the head off, you can easily see what's going on. And barrels, too. 
My compression gauge is a bit naff but when one cylinder shows reads a third of the amount of compression of the other, then something is wrong. More than one thing, probably. So I'll whip it all off, probably tomorrow if I've nothing better to do.

Sounds like the best you can hope for is a bent valve.  I hope that's all it is.

Howsa bout some pics?

I had to go inside due to a sudden heavy downpour. I got as far as taking the cam cover off, and was about the check the cam timing (just in case). When it's all out I will post some pics for the sake of interest. There may be multiple issues, and this is a chance to sort them all. As I'm taking off the head and barrels, I think it should get a set of rings at least. Probably the same (standard) size, if there's no damage to the bores. Plus maybe a new cam chain.

Luckily I have a spare head, with good valves in it. If I have to replace a bent valve, I'll have to grind and lap it in. What are your guys' thoughts on shimming the valve springs, even though it's a road bike? The problem occurred when I was redlining it, and the springs may all be a bit tired. 

You can measure the springs to see if they are still in spec.  No sense spending money you don't have to spend.

OK guys, think I found the issue. 

Where I've marked in red, is the cause of the crankcase pressurising due to compression in the head leaking through. Clear and straight passage through to the crankcase. 

A big chunk of piston is missing, as well as bits of rings. I couldn't see any damage to the other piston but I think the other piston has chipped a ring as well. Redlining this engine really didn't do it any good... The cylinder head shows signs of gouging (from bits of piston ring) in both combustion chambers. I can reuse it though. I did a quick and dirty test with petrol, and neither side is leaking through the valves. That said, I don't know if there may be damage to the valve seats. I probably won't remove the valves, as lapping them in again will just remove more material and it's more or less sealing.

I think since it's got to have new pistons and rings, they should be oversized. Remarkably, the bores look good, with no scratches that I could see. They do look highly polished though, with no signs of cross-hatching. Also I don't have telescoping gauges, so it would be a bit naff trying ways to measure the barrels. I think it's probably fair to assume they are out of spec, and this caused piston slap. I'll have to take the barrels to a machine shop to get them sized for oversized pistons.

Not checking piston ring end gap prior to assembly and adjusting if nessescary will do that to an engine.
That motor now needs a total strip and rebuild to ensure all the bits are removed. 

Meh!  Find the broken piece, use crazy glue and put er back together!

Fair point. Although it wasn't me who assembled this engine or put those pistons in. They were already there. The history of this is: some guy a few years ago sold me this engine as part of a different bike (which was a project he couldn't complete). That bike was a nightmare and had lots of issues, but the only engine fault was a slipping starter clutch (fixed). I put a few thousand miles on it. Then I parted out the bike and sold the frame. I kept the engine and some other bits, and put it together in this "LTD". 

It's not getting stripped down unless I'm parting it out - just isn't worth the expense of rebuilding. Don't you think the oil filter should catch most fragments? I'll dump and replace the oil, of course. 

The pump mesh and filter should catch any small bits carried in the oil. When a big bit locks the gearbox as it jams between gears at speed will lock the back wheel.
Small bits in the big ends will play havoc before getting caught by the mesh/filter. 
As I said that engine needs a total strip down to be safe for you to use or sell undisclosed. 

Looks like the piston seized, a chuck broke out, then all the compression was leaking through into the crankcase, blowing oil out.  Wow!

If the bores are good, you can hone them and slap in some new/used pistons.  I wouldn't spend tons of money on that project.  The engine should be fixable, though.

Wow! That chunk had to go somewhere. Maybe it broke in small pieces then got blown out the exhaust? Or it came apart a little at a time?
I don’t see how it could get into the crankcase without ruining the bore.