that IS a horrible notch!
you could, maybe, possibly reclaim that cylinder with some judicial use of a DENTAL DRILL rather than using a dremel or die grinder. they actually get into the ports, and allow you to do things. would you let a dentist stick a dremel in your mouth? well, how do you think your poor little engine feels about it?
the problem youre suffering from isnt necessarily from having raised the port too much, its from shaping it BADLY, with no regard to how the gas will flow when it enters the cylinder. will it purge all exhaust gases out the exhaust before it itself starts to exit? or does it actually cut the exhaust in half, leaving this great big pocket of dirty, burnt gas at rear of the cylinder, whilst half your fresh mix goes out the exhaust?
the degree wheel simply attaches to the crankshaft and lets you know when ports open and close. very important. but what it doesnt help is determining the way gas FLOWS. thats mostly just trial and error, guesswork, and the application of LOGIC.
said it before, ages ago...whats really required is a smoke machine/fogger, and the use of spark flash photography to really understand what changes can be made, and what affect changes have on circulation in the cylinder, as you spin the engine up at operating speed. sort of like a flow bench, but they do not let you see how the piston, constantly moving, also affects the gas flow.
dont stick any type of putty epoxy filler near the walls of the cylinder. one, its nothing like chrome plating, two, its prone to fall off, three... um...it makes a mess when it does fall off. use it further back in the port for redirecting/smoothing gas flow, but not for rebuilding cylinder walls!