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I have the same machine and mine engages at 3500. Has the dark blue primary spring. It actually has a very impressive take-off and will lift the skis easily with proper traction, but I have a EPI Pro clutch kit ready to be installed simply because I love the arm-stretching holeshot they add. My brother installed this on his ZR and it turned it into a takeoff monster. Unbelievable difference throughout the entire powerband in fact.
These engines are fairly bullet-proof when left alone and were advertised as 118hp back then. I don't know how much the 700 heads might add but the stock 600's are built tough and dependable. I would probably do a simple re-ring to get the compression numbers back up to factory specs again. Then work with the clutch; weights, springs, kits, etc.
Adding the bigger bores would also involve re-jetting, tuning, and clutching perhaps.
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