Go for warrenty claim.
There can be two kinds of issues:
1.valves and/or valve guide gone
2. Piston ring and/or piston and/or cylinder gone
* or may be both 1 and 2.
Before setting one's mind for which way to go better know what exactly is happened to engine.
Btw, new engine kit comes with warrenty & peace of mind and re-bore will give slight displacement increase (too small to count in unless you in for last size) & lower initial cost.
For long term low cost & reliability engine kit is recommended.



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