Your ring(s) are most likely worn. I have seen engines that seemed to have great compression, and that ran and handled perfectly, be down on power due to worn rings. The ring gap on these little engines is supposed to be really tight, like around .003" which is the thickness of a piece of paper. I would bet if you pulled your engine apart it would have a much larger ring gap. I have seen engines like this gain 800 rpms with only a ring change. The best rings around, better even than original, are made by Frank Bowman, and cost only $11.00. They are high performance rings made of a superior cast iron, and seat quickly and almost always give an engine a performance boost over original. Some people even replace brand new rings with Frank's for the best performance.
(On engines with two rings, I generally leave the stock second ring in place, and only replace the top ring with a Frank Bowman ring. Only one is needed.)
Frank Bowman:
[email protected] 505-327-0696
AV8TOR