I agree with Hughes regarding the piston, trash it. With regard to the ball hone, you shouldn't use a ball hone on a plated 2 stroke cylinder, the balls fall in the ports and due to the design of the hone they jump out and slap the cylinder, this can cuse the plating to fail. Wiesco has flexible hones that do not have balls on the ends and are reccommended for 2 stoke cylinders. I would look around the exhaust port, that seems to be the first place the plating starts to flake, there was a spot on one of the photos that looked like aluminum showing, check it real good.
Plated Cylinders: (Includes nickel ceramic coatings (Nikasil), chrome, Electrofusion, and boron composite.) If the plated cylinder is in good
condition, honing may not be necessary. If deglazing is necessary, DO NOT use a ball hone. Use a rigid or brush type diamond hone. Plated
cylinders cannot be bored oversize without replating or resleeving.