Tom:
Regarding the smoking engine - could be a lot of things, but this is usually caused by burnt oil or fuel deposits getting either around the valve heads or burnt onto the oil rings - either way, you get smoke, but more like yours if the rings aren't sealing. The fact that it doesn't have as much punch as my 2,110 AND the smoke is blue instead of gray or black tells me that it's probably the rings. Sometimes an engine won't break in properly and because there's a lot of oil getting past the oil scraper rings it cokes up around the rings and they simply can't seal. Try doing a compression test and a leak-down test to confirm it (that mechanic we stopped at along the way to Carlisle can help with this, I'm sure). Larry Jowdy posted a terrific break-in procedure somewhere on this site that will surely help, once the source of the smoke is eliminated.
At Carlisle, Chris mentioned trying a dose or two of "Sea Foam" to try clearing it up without pulling everything apart. The stuff is miraculous and was designed just to remove coked deposits where ever they occur (Vince: Coke THIS!)
Get some and follow the directions, but AFTER you've checked the valve clearance (just to be sure). It can be added to the crankcase oil, to the fuel, or dumped directly down the carb throats, depending on what you're trying to cure, and the stuff really works!! I would re-check the valve clearance after you use it, too.
Another thing I would try is to disconnect the breather hoses from both carbs so you have nothing vented from the case going into the carbs. Once they're off, drive it for a bit and see if that helps. THAT might point you toward something (or not). Let us know what happens with either the compression test, the vent hose test or the Sea Foam.
Thanks, Gordon and Chris