This is .061 engine, Nelson plug installed. Thats all I know.

cipolla?

See the tiger wasp down towards the bottom of the page

http://www.hobbyclub.com/CipollaEngines.htm

Yes, looks as mine. Thanks!

Does it work? Have you tried it yet? Show us the insides if you feel like it, i wonder if it's a reed valve..

here's a page with a picture of one with an exaust collector fitted.
http://www.pebotec.de/peter/motoren/cipolla/cipolla.htm

In fact this guys site has lots of pictures of 1/2a and other small engines from all over the world;

http://www.pebotec.de/peter/motoren/motoren.htm

It has very good comp, but it looks like reed valve doesn't close correctly. It runs rough. Any suggestions how to make a new reed?

Some folks say the disc material from a floppy disc makes a good reed, but you could probably use an .049 rebuild kit from Virginia Hobbysports ..$5...Rog