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

Is this it for my KZ440?

I was taking a ride the other day. Everything was working great. I opened it up and noticed it hesitated at the top revs (really at the very upper limit of the rev range), like it was running out of fuel, then when I rolled off the throttle the power lurched on again. OK, I thought, fueling issue. I tried it a few times, and the same thing. The bike was otherwise working fine. Probably should check fuelling when I get home, I thought. Anyway, didn't get around to it.

Today is the first time I've ridden it since that day, a few days ago. I knew I needed fuel, so I thought I'd take it around the block to the pump. A slow round trip of about 1 km. That's when the acceleration issue showed its ugly head again. This time, at lower revs. And the bike wasn't even warm this time around. Probably got worse as it slowly warmed up, but I'm not sure.

Anyway, got the fuel, took it home and noticed something. It's chucking oil of the top of the engine, big time. Not a fueling issue then. Also, the engine seemed noisy.

Here's what I know to be good and right: 

Electrics including ignition and timing.
Carburettor - no air leaks, and properly tuned (spent absolutely ages on getting it right, and it is right).
Fresh oil (good stuff, only about 300 miles old) and new filter.

Here's what might be a bit neglected:

Valve clearances - haven't checked for a long time.
Piston rings - pistons, barrels and rings all seemed fine when I got the bike, and compression was good, so I never replaced them.
Oil strainer - don't know if it's blocked, and getting it out would be a huge problem. I could probably do it with some sacrificial screwdriver heads and a stick welder. But nothing short of that.

What do you think guys? Was all working perfectly fine until that top-end acceleration thing popped its head up on the last ride. Now it's loud, lacks power and spits oil. Dead?

How is the oil level?  Could the carbs have overflowed, because the petcock isn't shutting off, and now the oil is loaded with gasoline?  A high volume will try to exit the breather.

The oil being spit out looks clean and isn't thin, and doesn't smell of fuel.
It was put in about 300 miles ago. A bit overfilled, yes. But what puzzles me is the loss of power. Loses power, roll off, comes back on (although not as much of it as before). Noisy, too. The air-fuel mix is fine, the fuel is good and absolutely spotless (sorted the tank properly, plus it has an inline filter). It has a single Mikuni carb (this is what took me ages to set up) and this engine with this carb has been absolutely fine over a year of leisure riding. The mixture isn't rich or lean and there are no air leaks. The idle is dead steady. The petcock is a manual one and it's left off. The carb is well-maintained and spotless inside, and the float works perfectly, and it has a hose which lets you check the fuel flow (lots coming through). 

I've got a few options at this point. If it's a blocked oil passage (e.g. blocked strainer) then the engine will be toast if I go out and give it a good thrash.
If it's a broken ring allowing blow-by, then taking it for a thrash will probably harm the piston and score the barrels.
If it's a bent valve, then it's got to come apart, and if I'm replacing the valves I'll want to replace the cam chain, piston rings and possibly pistons. All because I know the engine is getting on a bit.
Then again, if all it is is too much oil, then taking it for a good thrash would actually help. But everything about that feels like a bad idea...

In any case I should let it cool right down now, as it's a hot day and it's been out running, and I'd rather look at the plugs and valve clearances when cold. It did and does sound absolutely fine at idle. The disconnected breather outlet puffs white smoke as well as spurts oil. So, with any luck, it's not major engine damage. If it's something that will take a lot of work and parts, I may end up cutting my losses on this one, I think. But I don't like giving up on a bike. I'll think and think tomorrow.
 

I think the correct action is to not ride the bike until you find the source of your curent problem.  Early in your first post you mentioned that you had the engine up to top revs (presumably redline) when you noticed some. hesitation.  You also mentioned that you have some noise now.  It makes me suspect you have an engine problem.  I think a compression test will help diagnose the problem.  Do it with the throttle wide open and the spark plugs removed.  If you have a scope you could check out the cylinders after the compression test.

Good idea - that's what I'll do tomorrow. 

Anything I can try without pulling off the head (or anything at all) will be good. 

I suspect the compression will be fine. That's just a hunch, based on the fact it will still pull as long as I don't WOT it. It won't show a huge amount of compression, being an old aircooled engine at cold. My gauge has a flexible hose, and isn't the most accurate you can get, but it will be possible to at least compare before and after putting a couple of drops of oil down the spark plug hole. If it has just one failed ring, I was thinking, then the noise might be from one of the pistons not going up and down parallel in the bore. I think it's more noisy and vibey when riding it than before but I cannot be 100% sure. As I'm not riding it as much as I used to, I might be more sensitised to the noise. But if I put up a video of the bike running and rev it, I don't think it will be helpful as it's not an obvious noise. 

I'll report back after the compression test with my findings and whatever thoughts I've got then.

If the rings were worn the pressure getting by them would pressurize the case causing oil to blow out the breather but you say the compression is good. Maybe once the engine heats up and the bores expand and things loosen up, that’s when the oil comes out?

Can you hold your thumb over the breather pipe to see if you feel it puffing while cranking without starting?

I don't know for sure the compression is good but it has good compression, if that makes sense. It will start without hesitation (the weather's good) and it will be firing equally on both cylinders. 

I'll test compression tomorrow anyway, as the gentleman suggested. There will for sure be unequal compression between the 2 cylinders, but if the gauge shows me that something is really off, or there is a big difference, that may be indicative of a need for further research.

That's a great idea, to check if it's puffing while cranking without starting. You know, I think it might be, just going by the wisps of white I've seen while idling. I'll check anyway when it's light. 

One thing about issues like these on old bikes is, at least they're the sort of problems that can be solved (or not, if you choose not to). Thank you all for your advice and I'll check and report back tomorrow.

I would start with the oil level. If it is much too high, a good thrashing could cause extensive damage.

OK, cheers guys. 
Looks like there is an issue with the engine. It's chugging hard out of the breather outlet with every revolution, but not de-atomised oil coming out of it at starting motor speeds. That probably only happens at much higher engine speeds.

Compression test was done, with the result a clear fail: strong compression on one cylinder at cold ("150" psi) and weak on the other ("60" psi). Even though I don't really trust my gauge, that reading is bad. I did double and triple-check it. 

Only thing I haven't checked yet is valve clearances. 

All of the above doesn't discount that the bike might also be overfilled with oil (problem I've got is a black sight glass, so at the last oil change I emptied as much as I could, then put in about 3 litres, going by the casing saying it needs 2.9 litres).

Update: one of the inlet valves was extremely tight at cold. Absolutely no clearance in it at all. That would have been more than enough to bend that valve. This is also on the side that reads low compression. I set the clearance right, and the compression reading was still low. So, whatever the case, the head has to come off.

Thanks for the update.
Sounds like rings.
Also, if you’re using a compression gauge with a long hose, make sure it’s the type with the schrader valve at the screw end and not a check valve up near the dial. Because if the check valve is up at the dial, the internal volume of the hose is added to the volume of the cylinder causing the reading to always be lower than what it should be.

Excess crankcase pressure is normally one of three things

1. oil overfilled
2. Blocked breather valve
3. Piston blow-by (low compression due to valve lash shouldn't effect breather pressure)

You can trace the compression loss by carrying out a cyliner leakage test (there are lot's of references to this process on the forum) which will tell you where the compression loss is without doing any more than removing the spark plugs