hairline fracture on bore wall

I think people put too much thought into something very simple. It's an engine that can be bought complete for a bit over 100 bucks if you assume worst case scenario and it somehow destroys everything. The crack is in an area where the rings don't touch so there is no risk of ring snag. Yes the piston will ride there but since it is off to the side there will be little to no lateral load in that location. There are engines with no cylinder sleeve protrusion and the piston travels past the flange that run just fine - My Phantom 85 is one of them.

If it were me: I would just cut that corner away smooth it out and bevel the edge on the bore side just a little bit to prevent it catching the piston. I would bet money that cylinder would give a full service life if those steps were taken. Even if it didn't you can buy another cylinder and piston for peanuts anyway.
 
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