Hi Zomby,
Installing the "O" ring normally stops the leak, however if you have exessive crankcase pressure the "O" ring won't stop the flow of oil.
The best method so far is to remove the lever, remove the cam pin, and machine a ledge to allow the "O" ring to rest in the groove [between the cam and plate]. If you just install the "O" ring over the pin it won't stay against the cover to make a good seal.
Using a fresh bore and a cam ground piston [stock new edition Whizzer pistons are NOT cam ground] normally drops the crankcase pressure right away. Not sure why you motor didn't drop the pressure if the bore is correct and you used a cam ground piston.
The reason most Whizzer motors have high crankcase pressure is due to the piston & rings not sealing and allows blow-by into the crankcase. The majority of the Whizzer motors will settle down by the time 500 miles has been logged on the motor. Another cause is the breather system, and installing a small tube inside the tappet area will aid in reducing the amount of oil in the chamber. Insert tube in hole at the bottom of the NE cylinder and make the tube long enough to stop approx 1/8" from the top of the chamber. Drill 2 small holes at the base of the tube to allow the oil to drain back into the crankcase. The tube should be 1 1/2" long and the center hole should be 5/16". In order to press fit the tube into the hole at the base of the tappet area it needs to be .475" O.D.
See attachments
As far as the suggested use of the automatic compression release, Whizzer already installed the device on all the late model NE-Rs and Ambassadors and they leak compression badly and must be replaced with a 10 MM fine thread bolt.
Using the compression release on a 2 stroke was used in the early 70s on the race track before anyone figured out the open release at high RPMs removed all the oil from the cylinder. I watched hundreds of race bikes blow up when the release was used at the end of the straight to slow the bike for corner entry. It is amazing how quickly a 2 stroke will lock when the oil is removed from the piston/cylinder at 8000 RPMs.
Have fun,