I just modified one of these, haven't ran it and it has fairly low compression and a scored cylinder, so it might have just been practice...

as for taking the gasket out completely, there isn't room, the piston will hit the head (mine was that way anyway), just use a really thin gasket material. probably best to get a frank bowman ring, as my ring gap was pretty big. to modify the muffler, just take out the two plates in the middle that are it's form of restriction, if you're going to make a different outlet for it, just braze/weld the pieces together and make it how you want it, and if you don't like the springs, I saw one in a local club members museum that had bolts through the factory spring holes and to the head where the springs normally mounts. I'm planning on keeping the springs and the factory outlet as mine is planned for a 40 size US Aircore coroplast biplane that I'll just make the exhaust exit in a decent place

as far as porting, the exhaust port sucks from the factory, way too short, if I remember right the timing was around 110 degrees, and around 90 for the intake. I think I widened the exhaust port along with raising it, and I just lowered the intake, I think it was pretty wide, just had sucky timing... the transfer ports are a pain to work on since the cylinder is so small, I slipped a few times...

a removed factory carb from a 25cc should be fine for this tiny thing...