1. How in the world do you get the governor gear off? (see pic 1)
The gov gear is threaded on. Normal direction of the gear tightens it; which I think is clockwise, so turn it counterclockwise.
2. How bad do you think the piston is? (pic 2)
What is the best way to get it out? It is sticking out the back about 1/2". (pic 3)
Cut a block of wood to fit into the cylinder as close to the sides as possible; Flush out as much of the rust you can. You can set the engine block upright and pour brake fluid or PB blaster into the cylinder. The when ready, put in the block, use a BIG hammer and tap it out.
3. The retard/advance lever took it tough. Is it something that somebody reproduces or has parts of or should I braze it up? (pic 4) Secondly, from the hole where the pin goes there is a small hairline fracture going about 3/4" down the pin (towards the handle).
Is that something I need to fix/replace or is a hairline fracture ok? No problem; it'll work
You can get parts at hitnmiss.com
Ask for Ed. He's a great guy!