Surprise when taking off the cylinder

[Toast]

I pulled apart my engine because the cam end plug started leaking pretty badly and I knew it needed rings because it burns oil. Other then that the bike was great, a little down on power but would run all day. No horrible noises and once it was warmed up it purred.

I pulled off the head and the piston was sitting halfway and the bore looked better then expected (40k miles). I pulled off the jug anyway and saw this... Wtf is going on here???


Large Version Here

Slight shiny area from piston slap


The piston didn't have any abnormal wear and the rings weren't broken or mangled. The oil ring was a little stuck but that was it, the rest of the engine looks almost brand new internally and the oil is always clean (no glitter). The gunk/water spots are from degreasing it last night.

Is it just really crappy machining from the factory or something worse? There isn't any rod knock and just some minor tapping from the top end when cold which goes away after a few mins.