My '73 RT3 has been quite hard to start recently, this hasn't always been the case.
So much so that I decided to pull off the head and barrel to have a look. This is what I found.........
One of the piston pin circlips was missing and it looks like it took a ride up and down for a bit before
leaving the premises. Pretty sure this piston and cylinder are junk, just wanted some other thoughts
and best options for dealing with this. 

You can have the cylinder sleeved, would be a good time to do some porting too.

Can you bore it, any oversizes left. That doesn't look like a recent event or the rings would be damaged & likely stuck in the grooves, or is it worse around the other side of piston. Give it a hone & a set of rings & she'll go good--if piston is ok. Or go out two sizes & might clean up. Worst of the damage looks below the transfer so won't matter from building compression point of view. Did it still have good compression to feel on the kickstart--wouldn't with trapped rings but otherwise if felt ok i'm just thinking something else was causing hard starting despite damage.

DEFINITELY needs a oversize rebore .25 or .50mm and new piston and rings.

I agree, I don't think this happened recently. Rings look fine. Why does a circlip pop out? Is it because of excessive piston slap?
  When I first got the bike it didn't run so I put in new points,pulled the head and timed it properly and it started first kick and was relatively
easy to start until recently. Not sure of the bore size as I have not measured it but the piston is a factory piston with no oversize markings which I assume they would have if it is in fact oversize. That scrape down the cylinder feels .030" though deep for sure but if it has been there for years and now that I think about it, I think I recall seeing it when I first got the bike and took the head off to time it, not sure why it's hard starting (not starting now with excellent spark and a perfect working carb).

Marks can feel deeper than they are as get raised at the edges. If there's nothing on the piston it could sill be std 80mm. Usualy has something though denoting clearance on std like 96.something--or something like that. Anyway--has the complete circlip gone or just the ear?. Hate to say it although hopefully not 'you' but not fitted in the groove as it should be is the best-worst answer i can come up with. The pin does seem to wear the clip at the ear though over 50 years but that wouldn't pop the clip out & if it goit bad enough just the ear would drop of.

I saw a GSX400 twin once at work & being 4 stroke the circlip ear--don't think complete clip but maybe--had jangled around for a very long time & ate the liner away the width of the pin, wide groove & deap too. Not sure why it came in but probably down on horses on one cylinder. No transfer for clip or ear to fall out of.
Was 'mechanic at next bench to me' that got that job & something once seen you never forget. Same mechanic went on to be Valentino Rossi's suspension man "think suspension" or maybe that came latter with Rossi. Just the nicest guy & never gets flustered. Came from not far away from me in NZ. Great what you can find easily with just google a name. Sorry i've gone wandering way off the post--again.

www.facebook.com/watch/?v=202691334711526

Any source for the sleeve?

This place installs sleeves, they can also port it too, there are probably others.

Klemm vintage

Why are sleeves being considered when you can go to one mm over for less cost by far. Maybe i'm behind on the story. Good to know who does what of course when sleeves are required.

I sure wouldn't worry much about a vertical groove like that one on a rider. Bore it a size or two over and it should run just fine.

Another option might be a place like Millennium Technologies. They may be able to repair and/or plate the cylinder bore to any Yamaha piston size you want if still on standard bore now. If they plate it, you'd have a bore that would probably never wear out..

Sleeving would be a last resort for me. Expensive and sleeved two stroke engines never seem to run the same as original.