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I'd say do what you can with the budget you got, trick cylinders, inverted fork and SSSA will cost you thousands and it will still be an old RD "wet noodle" handling
Get the RD all pretty (Cafe if you have to) and and sell it, then use the money (Hipsters pay real money for them now) to buy RZ350 motor and any decent chassis (like my NSR) and you will have a very nice handling and very trick 2 stroke bike.