TOPIC:

Again, I have no experience with setting up carbs for a big-bore kit, but I'll put my spin on this.
First thing to consider is with respect to the "Idle-Mixture Screws" (6). In my opinion the term "Mixture" is misleading. The actual mixture of fuel/air is basically pre-determined by two factors. 1) The AIR metering orifices that supply air to the idle circuit. They can be seen in the air supply ports on the Filter side of the carb. The upper ports provide mixing-air for the idle circuit - the lower ports supply mixing air to the high-speed circuit. For each idle circuit there is another ("blind" - not accessible) air metering orifice, buried in the carb.. For the purpose of keeping this simple - The mixing-air available to the idle circuit is Fixed, as determined by the size of these metering orifices. 2) The fuel for the idle circuit is metered by the idle jet, however; Given that the Mixing-Air is "fixed", the latitude for changing the Fuel/Air ratio by changing Idle-Jets, is narrow. This is where I have an issue with the term "Mixture-screws" (6). These do NOT adjust the fuel/air ratio. The fuel/air ratio and actual mixing of the fuel AND air has already been predetermined by jet and air orifice sizing. The Mixing of the two takes place immediately above the idle jet, where the air is injected into the drawn-up fuel. What the six idle-screws do is supply more OR less mixed fuel/air to the idle ports in the venturi.
The puzzle to your dilemma is - Why are you reading a leaner A/F ratio with larger Idle jets? This makes no sense so I can only surmise that it's due to some quirky dynamics of how the fuel/air is supplied and mixed within the carb galleries which are unique to the carb design in itself - exacerbated by the increase in jet size. In other words - some weird law of physics that makes things work in the opposite/inverse to what's expected and considered normal. This might be the case, specific to the big-bore kit and how the increase in displacement is affecting the draw of the idle fuel mixture at the point of entry into the venturi and what(?) dynamics it could be inducing in the intake runners; the physics of which is above my pay scale.
I need another coffee so will leave this for the moment with the hope that something written here, turns a "Light-bulb" and sparks some additional dialogue.

To those who have done a big-bore kit ...........Don't ya'll jump in at once ! ( cuz there's no Imoji for "Sarcasm")

Funny thing is the bike started right up on choke. I turned the choke off within 30 seconds and idles fine. AFR gauge reads 20-21. This is way lean. Shut it off, hit the starter and it fires right back up.

It does have a bad hesitation coming off idle, but that could be fixed by raising the needle.

Other than that stumble, it does not act lean.

So, maybe I should recalibrate the O2 sensor before doing anything else.

All these bikes seem to run fine with the needle set in the middle notch so I wouldn't try raising the needle. I Don't think that would correct the issue. The velocity of the air flowing down the venturi is still too low to pull fuel up the mains below 2000 rpm.
All of these bikes struggle with the transition ports being blocked if they have sat for a while. The only way to clear them that's been effective is to flush them in reverse flow with lacquer thinner. The Lacquer thinner breaks down the varnish and reverse flowing will push the crap back out the passages rather than trying to force it out the transition ports which is the smallest part of the idle circuit.

Scotch makes a transition port "cleaning tool" specifically for clearing these transition ports and it works a charm. I have an air chuck with a outlet nozzle 90 degrees to the air chuck and can blow compressed air directly into the transition ports but it is in no way close to being as capable as Scotch;s cleaning tool.

I've condemned lots of carbs to the scrap heap because of issues with the transition ports and only through the teachings of Scotch, have learned how best to clear the transitions. Scotch's tool is specific for the KZ1300 carbs and I feel it's priceless. Send him a PM with your address to calculate shipping costs and he'll provide a quote.
Here's the PDF showing the tool and how it's used.

It does have a bad hesitation coming off idle, but that could be fixed by raising the needle.
Other than that stumble, it does not act lean.
So, maybe I should recalibrate the O2 sensor before doing anything else. .

The "stumble" referred to is very indicative of a transition port (s) not delivering correctly. Kawboy explained it perfectly.
"Thanks, kawboy, for the "plug". Might have to renegotiate your contract. You are now a tenured member of my sales staff !

Just to add to the mix. I have observed that the cold start has evolved over time. It's quite different now. It also changed with outside temperature increase now as the summer approaches. The last time I started the bike was around +14 or +16 degrees, and yesterday we had +24 C. I don't expect it has changed.

Progressively the bike needed much less time on choke, and less play with it. Right now I have basically two positions when using it. First full choke JUST to start. Literally a couple seconds. Second, right away press the lever down to where the bike just starts a smooth idle at around 1500 rpm's. The follow up - as the engine warms up the idle has a tendency to go up, and that can happen very quickly. So I stay with the bike gradually closing the butterflies, as since right after the start it's just about controlling the throttle with the lever and nothing to do with the choke. All takes maybe 5 minutes to have the bike idling at 1000 rpm with the butterflies manually open just a little tiny bit, and perhaps this has to do with what I will say next (the bike is parked on a slight slope). In freezing or below freezing temperatures this would take 10 - 15 minutes.

Two things I have noticed are: the bike doesn't like to idle when on a slope, facing uphill. The idle slows down. More angle - more rpm drop. Another is I experienced a 'stumble' on heavy acceleration changing in higher gears. I haven't really done anything academic in terms of writing down exactly what and when and how much, so these are just loose general observations that don't really bother me. And the 'stumble' is not written in stone, just happened a few times randomly. There is nothing like that when revving the engine stationary. I am wondering, could it be related to float levels set a bit too low? Changing gear, there is a sudden drop in rpm's as well. Maybe related.

Question for Frank - weren't you going to install fuel injection on the bike? I think you talked about megasquirt system.

........and I'm still "thinking"