I had one of those orange XL-175s, bought it brand new. That was the first model year of that bike, it replaced the SL-175 of 1972 which my dad bought brand new and I still have to this day. I put Powroll 200cc kits in both of them. I ended up stripping the lights off the XL, ported, polished the head ran a supertrapp muffler and raced it cross country. Couldn't keep up with the two strokes of the day, but it made a good hill climber. Those single cylinder bikes had issues with camshaft/head bearings. Mine eventually scored, I disassembled the bike and transported it in a parts box for probably 21 years. My wife gave it away in 91 when we moved from Ft Worth to Atlanta. I bought a 74 off craigslist about five years ago, rode that thing for a couple of years. Was a great bike.
The engine is basically 1/2 of a 350, pistons are swappable. If it was me, I would buy one of the high compression pistons used for 350 racing and stick it in there...