this happened to my rm125 wen i first bought it. It was jetted perfectly (so dont listen to just anyone, check the colour of your spark plug). The fool that had the bike before me put it into a shop (suzuki dealership) and had a new piston and ring put in it. (they f*%$%@d up)
Mistake no1 by the mechanic- Used cheap piston and ring
Mistake no.2 by the mechanic- Wen he slid the barrel over the piston, the ring wasent in the clip (rite position) on the piston.
Once the bike got hot the piston started to expand but the ring couldn't, this caused the bike to die (just like u've described). The ring broke in 2 peices and one bit went to the top of the piston and got hammered into the head. Im not saying this is wat happened but its a possibility.
U wont need a new head. But if ur handy with a grinder and sandpaper and a good quality polish you'll get those marks out no worries aswell as gain a bit of horsepower. However, if the ring has done damage to your bore, it will set u back well over 500 bucks. Dont take it to a shop they will rob u. If your barrel needs to be re-sleeved call or email serco, thats who dun mine. Get a CAST IRON sleeve put in it. They'll supply u with a full piston/ring/gasket kit all ready to bolt up.
I knoe its hard, but look on the bright side, while the barrels off u can port and polish ur exauhts ports (it makes a big difference to the top end
)
Also pull ur reed block out and check it for damage or signs ov wer. (are they standard or aftermarket).
And check ur powervalves. If they are to close to the pistion/ring, they may have hooked up on the ring and ripped it off. (mine had to be grinded)
go back to standard jetting(this will be richer then paris hilton) and work from there, go off your plug colour and feel of the throttle.
Good luck man, hope this all helps and gets u bak riding,