I drive a KTM 125 2-stroke on the street and am a true KTM fan, but have to add some cautions about using a KTM engine in a bicycle.
First is the huge jump in power from 2hp to about 8hp. As fun as it sounds, there is danger in that. Especially for someone new to motorized bicycles. The speed possible increases the likelihood and seriousness of injury, and the likelihood of mechanical failure.
Second is the reliability myth. All the things that go wrong with China Girl (Happy Time, whatever) engines, will also go wrong with a KTM engine FOR THE SAME REASONS. By the time most people get to a costly KTM engine or motorbike, they have gone through several other 2 stroke bikes and have gained experience along the way. They come to a KTM understanding the importance of quality oil, proper mix, good air filters, jetting, and routine maintenance. This is part of the reason my China Girl has run well for thousands of kilometers, experience has taught be how to look after it. I can assure you if you make beginner mistakes with a KTM engine, it will die.
This year makes 40 years of 2-stroke experience for me, 40 years since I read Gordon Jennings "2-Stroke Tuner's Guide" and 40 years of 2 stroke motorcycles, snowmobiles and chainsaws and jetskis. I believe these simple China Girl engines are a wonderful place to start and learn from, before you move on to KTM and other more expensive makes.
This is my my 50hp, 300 lbs KTM powered quad, and my recently departed and sadly missed little red power dog.
This is the way to get thru mud quickly!
Look at my boots. This quad can truly "blow the boots off ya!"
And yet, I still love the simple China Girls.
Steve