The clutch argument won't work. Bottom line, gas motor, regardless of size, needs registration and you need an M2.
There's plenty of threads on here about CA laws.
If you want to see them all, google "california dmv index m." Scroll down to motorized bicycle.
The laws are actually pretty clear, and most cops won't hassle you, depending on where you ride. Newport beach will impound your bike if it, or you, aren't legal. Most other OC cities, you can ride around barefoot with speedos on and they won't bother you.
If you think you found a loophole, good luck in court.
Oh, and welcome to the forum.