TOPIC:

82 KZ305, 10,000, miles, everything stock. This bike has been my daily rider for about 3 years. It uses a lot of oil. From top of sight glass to bottom in about 200 miles. It has always been like that.
Since it also had oil seepage around the head gasket, I decided to kill 2 birds with one stone, and rebuild the top end earlier this year. The head gasket oil leak is solved, but no change in oil consumption.
Pistons and cylinder bores measured within spec and ring gap was to the smaller side of spec. I lightly honed the cylinders and lapped the valves, and put everythind back together using no new parts, except gaskets and valve seals. 
Am I missing something that could cause this much oil use? Most my riding is under 60mph, with an occasional highway run at 70mph for 10 miles or so.
There are no oil leaks and bike does not smoke.

Did you replace the valve seals?  And what did the combustion chambers look like when you opened the engine?

I think you should have replaced the rings did you take a compression test?  try to open the oil filler cap if it blows you have a blowby aka bad rings
how is airfilter ?

It can only either "leak" or "burn" oil so you would expect some evidence somewhere (sooty plugs, oil in the airbox etc) did you clean the crankcase breather ?

High oil consumtion can also be caused by blocked oil holes in piston grooves:

These tiny holes in the root of the oil control ring grooves are, most likely, partially blocked by carbon build-up...

 

H.

Those holes are there to allow oil to flow outward (onto the cylinder wall) AND inward back into the crank-case. 
If blocked (even partially), the oil scraped off the cylinder wall (by the oil scraper rings) will have nowhere to go, and will move up onto the top of the piston (through the compression ring gaps) and be burned.

Also, accellerated cylinder wear may be evident, as lubrication of the cylinder walls will be deminished.

H.

Bought a new 1982 GPz1100 (in 1982) and rode it for 23,000 miles (before selling it as I was moving out of mainland USA).  I had to closely monitor my oil level as this motorcycle conspicuously drank oil.  The motor did not smoke and I never fouled a plug.  The cause, as explained to me via the dealership, were the piston holes (as explained by howardhb). This was typical for the 1981 and 1982 GPz1100 models.  Perhaps this flaw also applies to other models.

To answer some of your questions:
Valve seals have been replaced.
I cleaned some carbon off the top of the pistons and inside of head, but nothing I would considered excessive.
Compression is left cylinder 150psi, right cylinder 160 psi (per service manual 119 - 185 psi)
Opening the oil filler cap at idle, I get air puffs of air in and out.(I'm thinking this is from pistons moving up and down.)
Air filter is clean and dry.
Plugs look good. There is no oil in the air box.
I disconnected the crankcase breather tube from the air box and could easily blow through the tube, into the crankcase with the oil filler cap removed, but it built up pressure with the cap installed. I can also blow from the tube fitting into the air box.
I cleaned the pistons and ring groves well but was unaware of the holes, so they were not checked. So that could be the problem.
I'm also question if high oil consumtion is normal for a KZ305.

What are the specs on the oil you are using ?

Street Fighter LTD wrote:

What are the specs on the oil you are using ?
 

Shell Rotella T4 15w-40.

When I was riding my KZ750 back in the 80's, my bike consumed oil as well but not anywhere near your bike. I had to add 1qt every few month, depending on how many miles I rode. Bike never felt right to me, so I decided to overhaul the motor back in late 80's/ early 90's. Fast forward it to few years ago, bike never got touched since I took it apart but due to my son wanting to ride my bike, started to put things back.

Sure enough, most of my oil holes on the piston was blocked off. I'll say around 90% of the hole was clogged or blocked by carbon. I haven't yet to fire the engine, but just wanted to share this because previous post mentioned the same symptom.

Marvel Mystery Oil (MMO) is a good product to break down carbon on pistons.  I learned this from some GM Saturn engineers, who told me it was recommended in those cars to keep the rings free, because those cars had "low tension" rings, which liked to coke up.  I don't know the ratio of gas to MMO, but the recommendation was to add some to the gas when filling up.  

The MMO label says 4 oz MMO to 10 gal gas, so that would be almost 2 oz per tank for us.