Cb360 piston rusted and stuck in cylinder

Get a small punch and drift out plug centre then use a 7/16"drill (all from combustion chamber side.)

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we had to re-profile masonry drill bits to cut through high carbon steel

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I have used modified tungsten carbide masonry drills to get me out of trouble a few times. If you go slow and keep the heat down they will cut through tool steel up to 60 Rockwell C.
A big fan of soaking in diesel for week and then use some heat. Once the core is out you might be able to weld an allen key (or similar) in the centre and screw it out (after soaking in diesel).
Sounds like you are in Australia. If in Melbourne I might be able to help.