Milton is correct. What he has seen with this engine is quite common, and the engine manufacturer doesn't matter. All can suffer the same fate. Few that run an engine on a stand for extended periods of time ever disassemble the engine and check the condition of the rings and cylinders after running. The vast majority just remove the engine from the stand and hang it on the front of the plane. They fail to notice that compression has dropped significantly, or if they do they might thnk that the lower compression was due to rings "breaking in". If they were to disassemble the engine they might find the compression loss was due to the piston ring beginning to stick at the exhaust port side of the piston.

Without cooling air additional to what the prop provides there is a good chance that the engine can be damaged by long runs on a stand. The prop does not provide very much airflow through the cylinders, and without having the air ducted through the cylinders the air from the prop has little cooling effect. Simply using the exhaust side of a shop vac with the hose directed to the side of the cylinder will provide much better cooling and permit long runs on a test stand. Monitoring the cht with a thermocouple and live data feed is also important. Temp guns are useless for even coming close to the actual cylinder temps.

I have the feeling that Milton's customer lied to him though. At 3,500 rpm it would have taken quite some time to cook the ring and coke up the engine. It was liklely run continuously at full throttle for quite some time. The oil and mix ratio selected will have contributed to the problem as well. As Jake noted, there is no point in running a gas engine rich.