Hi Vince
Yes, it is better not to make the piston and the cylinder from the same material.
Actually, if you are going to run it with pressurized air(since you are using mild steel), I would propose to make a brass piston with teflon piston-rings. I would even say make them seamless, they can be expanded with a cone and after that you compress them again with a funnel shaped ring (only slightly tapered).
Regards
Florian