Update: So we got a new engine installed last weekend, and had the bike to the tuner to make sure fueling was dialed in.
After breaking it in, and running it, he noticed there was a drop in power between 7-8K as well as the top end was down on power and also dropping off early. Right away he suggested there was an air issue.
Since the air filter was new, we looked at the exhaust. I am running the stock header with a Hindle slip-on.
The cat was not only plugged, it was sitting cocked inside the chamber, most likely from a crash. It is not welded in, only press fit.
Took an air chisel and pliers to it, and removed the cat honeycomb guts. The stock header is now open.
What we found could definitely explain the failed cylinder on the original engine!
We think itís likely that it was so plugged up that it couldíve overheated the original engine and burned the rings. All data says that Cylinder #1 is usually the one that goes in case of overheating.
Will report back when we open the engine up, but for now at least the new one shouldnít suffer the same fate. So if you are running the stock catted header for racing, either get a full system or get rid of the cat ASAP!