on any bike I have rebuilt, I have always put oil on hte cylinder wall. As far as breaking in the engine, there is a thread on here somewhere. It goes something like ride it for 15 minutes then let it cool for a half hour. Do this like 5 or 6 times, increasing the amount of throttle you give it with every ride. After that you are good to go. I rebuilt my CR 125 and let it idle for a couple minutes, and then took a couple laps around my house giving it little throttle. I let it cool down, changed the oil and then beat the hell out of it. The top end is over 2 years old, and the bike gets ridden very hard just about every weekend and still has tons of compression. I always mix the gas at 20 to 1 for the break in tank, even though it will foul plugs a lot faster.