Use soluble oil and water , it cools better and doesn't carry the abrasive through the pump like oil does . I have the same machine as you, got it in 1962
I've ground a lot of valves since then.
Bill
If you put it in the ground side nothing is hot , If you put it in the hot side the hot post and the cable going to the switch are still hot when turned off.
Bill
Is there an oversize stamped on the top of the piston? An .080 piston would measure about3.265.
Sounds to me like you,ve got an .0825 oversize bore and pistons.
Bored & stroked, The posts about tin can sleeves do apply!
My first engine about 70 years ago was a 41 merc with tin can sleeves, I pulled the sleeves and ordered .0825 pistons and then found a crack in the block. I got a 59L and bored it .0825 and used the pistons in it, Nice engine...