I massaged the piston and the bore with #1200 grit wet and dry sandpaper soaked with WD-40. Then I went over both with a little Simichrome on a clean soft cloth.
I reassembled and tested. It would still bind up on occasion.
I lightened the spring tension more to slow it down and still had a little binding after running a while.
Out came the piston far enough to remove one of the two o-rings.
This at least seems to have done the trick.
I also retarded the timing some more to get it closer to top dead center. It had been firing pretty early.
I have made a little video footage to go with this including a piece of slow motion video.
Gil