Hmm... That sounds bad!
This sounds like the wrist pin bearing broke apart. The rolling elements fell into the crankcase and eventually pieces were blown up the transfer ports, into the cylinder. The bearing pieces danced around the top of the piston for a while, dinging up the cylinder head and the piston crown, then finally a piece entering or exiting a port got clipped by the piston on a upward stroke and got jammed between the piston and the cylinder, which caused the abrupt seizure of the engine. It will be obvious once you get the cylinder off. You will probably have to take the entire engine off the bike. It's hard to simply lift the cylinder off when this happens because it's severely jammed. You will probably have to knock the piston down with a hammer and a drift of some sort.
Unfortunately, it sounds like your engine is toast.
This can easily happen from running a lean mixture, as it deprives the bottom end bearings from adequate lubrication. Lean conditions also aggravates the possibility for detonation which Ludwig mentioned. Detonation will transmit extreme forces to the engine. These forces are sharp in amplitude, and do little to produce power to the wheels, instead the energy generates tremendous heat and tends to destroy wrist pin bearings.
This is precisely the reason I started making large billet cylinder heads for these engines.
Well, good luck reviving your bike!
-Fred
