Tom,
First off welcome to the MEM forum. If you have a chance, tell us a little bit about yourself in the welcome section.
I built a Little Dragon about 8 years ago and had a few problems with it at first. Most were compression related. It piston cylinder fit needs to be very good. I ended up with lapped cast iron piston and cylinder. Made cylinder first and lapped it with a brass lap. Then made the piston and lapped it independently to fit. As I remember it runs at about 9500 RPM with a 7-2 propeller and this is probably about all you will get out of a long stroke engine like this.
With just a light coating of oil wiped on it will hold compression about 2 seconds at top dead center when turned over slowly by hand. Turn it to TDC and it needs to hold compression for at least one second and when the prop is moved off TDC it should rotate 30 degrees or so from the compression. Again, only with a light oil coating.
I still have some notes on it here (somewhere) and will try to answer any questions you might have.
You probably have read the build log that Ron did on Model Engine News, but if not here is a direct link to the first page.
http://modelenginenews.org/lildragon/index.htmlAnd a link to the blurb he did on mine in MEM.
http://modelenginenews.org/ed.2006.05.html#t8Gail in NM