At the current measurement of 3.341 inch, You are already at either an 020 overbore worn larger or a very tight .030 overbore. In either case, at that measurement, you do not have much choice: Either you can try a final bore/hone to 3.3425 or you can go .040 over stock for a final bore of 3.3525 which I really don't recommend because cylinder wall thickness becomes too thin. Port webs don't cool adequately and can warp into the cylinder.
The other last option is to have that cylinder re-sleeved. That takes special tools to bore and insert, ports must be cut into it, and the liner alone costs about 100 bucks--not really a cost effective option.
If you can not clean up the cylinder with a light overbore, look around for another block. Let a good machinist tell you if it is do-able.
Listen to me! I am quoting you actual numbers on bore. I occasionally have moments of clarity and every once in a while give a good answer.
If you opt to look for another block, since the 125 is a 2.875 stroke, the crank will not work in a 120 HP block because it will change the port timing and pistons will not fit either. Everything else is swappable. SO: If you find a 120 short block (block with crank and pistons) you can swap it onto your leg and you most likely will be happier. The 120 is a better engine.
Aftermarket oversized pistons are balanced to factory weight so there is no unbalanced condition if you replace one. The engine will never notice it and will probably last a good long time--if you do it correctly.
