Today I fully confirmed the power loss is due to the exhaust system. It was really the last thing on my list of things to focus on. Let's face it, these engines are simple...there's only so many things that can be wrong with regard to poor performance.
At lunch I took a ride on a hill that I know very well. Even with the motor at its best I would have to pedal up a few very short sections which was acceptable. With the cap off I flew up that hill and did not have to pedal anywhere along it! And hitting the top I immediately disengaged the clutch to see if it would stall. But no, it just keep idling fine. It's obviously too frickin' loud...but I would almost say the motor seems to like it...and the loud sound sounds GOOD! It's snappy like a high octane dirt bike.
Then I went up the most outrageous set of switchbacks I know of near by. I've only tried it once before and was pedaling almost all the way when the motor was at its most powerful. The mountain is named Zhong Zheng Mountain, Zhong Zheng is the affectionate name for Chiang Kai Shek.
There used to be two huge Chinese characters carved into the forested mountain face which is so steep the characters almost appeared to be vertical. The men who used to maintain it, old Kuo Ming Tang soldiers stopped doing so about 7 years ago and since then it is now completely overgrown and filled in with trees. This road I rode goes there.
I powered up that all the way, only pedaling briefly on one or two of the switchback curves and that's only because you have to slow down to take them on; they're hairpin curves. I am amazed! That's pretty much the baddest ass hill I'd ever have to climb in north Taiwan.
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I think I will retain the power gains of a removed muffler cap by cutting off the stinger tube (as suggested above) and trying to drill out the existing exit port.
I'm so stoked to find out why my bike wasn't climbing like it used to. I thought: "Oh well these are cheap little engines and they only last so long." But you should of heard that little girl powering up those tight switchbacks through the woods and mountains! It was yee-ha!
I'm going to run her a few more times up the hills over the weekend, weather permitting, and then check the plug as Map wisely suggested. I don't like pulling NGK plugs because the soft aluminum washer/seal is designed to be tightened down once for a good seal. Fortunately I have a brand new spare plug.
I'll do a sound recording with my GPS/Video cam on the next ride.