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Looking at Jan's site he has cast iron for both the cylinder and piston, no mention of graphite (Grey cast iron does contain graphite but he does not mention graphite rod)If its is iron in iron then I would lap the cylinder, lap the piston until it starts to enter the bore and then use 1000g lapping past to lap the piston into the bore.
A cast iron piston in an aluminium cylinder should work. The clearances may increase a little as the engine heats up, but by then it is running
Not sure as to the type of balls shown on youre drawings? I know they are now using 3/16 viton
would be a pity if you inadvertantly parted off half the piston while cutting the groove.J