Well before you tear down the engine, compression test it first with a tester that uses a small rigid line. Large rubber lines do not read properly on these smaller cylinders.
If compression is good, and no oil is being burned, I would leave it.
As for a chopper, it depends on what you want to do. Do you want to rake the front end? Do you want a rigid?
If you get longer forks, then you will want to do it right and cut the neck and reweld it to maintain a level frame. Otherwise, fuel does not flow right and steering is messed up. A rigid can be done with either welding a new rear end on OR you can get struts to replace the shock, which is much easier and allows you to see if a rigid is what you want.
I think there is a link here on "konging" a frame, this lowers the seating without lowering the bike.
It looks like some of this may be on the bike already but hard to tell from the small pic.
The ride IS the adventure. The destination is just to get gas!