Sparex offers .040" pistons for the 4/49 engine. I just bought a set this summer. $55 or so each, very good quality, made in England. Same piston that late 990s used. http://v2.gb.sparex.com/ItemDetails/ItemDetails.aspx?ItemNumber=57514&OriginalItemNumber=&CurrentTab=ModelCompatability#Tabs
The parts guy at your Case dealer needs his butt kicked for selling your the wrong ones.
A 1394 crank will drop into your 1290 fine so long as you are sure you have the 4/55 pistons.
No issue with the fuel system.
As to power out of a 195, how fast do you want to run it? How many mods do you want to make? In stock form, you can get 60hp just by letting it run as fast as the 4/55s run.