Well, although I did get some projects around the property done with the tractor despite it's bad smoking habits, it was time to tear down and fix the problem. If anyone has the manual, it is amazing how quickly you can separate the engine from the transmission on these. You can pull the pins in one of the front axle bars and fold the front tires aside. I opted to remove the whole front end and roll it out of the way.
There was considerable piston movement so they are worn out. We pulled the caps and the main bearings don't look that bad. Everything looks like it has been serviced before. Most parts are marked with .010
The clutch doesn't seem bad, the ring gear is missing some teeth from when the starter must have bound up. I also found chunks of the starter bushing in there. Will need to order a new one of those as well. Off to the machine shop...