An update -

I emailed Amelung Sunday night and received a response today.
Based on the description of the failure and photos attached - he is willing to repair the engine under warranty. That is excellent news! I am impressed when a company stands by its products!

In the email, I disclosed that the cylinder was removed. There was no commentary on that point from them.

The C clip was not loose in the cylinder, but rather, embedded in the cylinder wall. Upon closer examination, it appears that the material forming the outer wall of the retaining groove failed - allowing the clip to depart the piston.