Hi, some comments.
Mine is an ETZ251, yours is a TS251, I do not have the Haynes manual for yours, but you mentioning those squish numbers (1.4 to .1.6 mm) made me look it up in the original MZ manual, where I find:
That's the same 0.9 - 1.2mm as is mentioned for the 250cc ETZ's, maybe Haynes is in error here? The pic above pertains to the TS250/1, which is different from the 4-gear TS250. (Btw, you upload pics via the 'Upload attachment' tab at the bottom.)
I'm not sure head gaskets in 2.0mm thickness are sold, but you could make them yourself. A thickness of 0.2mm is common, and yes, if you need 0.4mm for the right squish, you can fit 2 on top of each other. There may also be 0.40mm thick gaskets, I don't know. I think 0.50mm is the thickest available.
A piston should always be measured at the skirt. Because of thermal expansion, the crest always expands more in use, and is therefore a bit smaller (pistons are made to be tapered). Again the manual shows how to measure:
See the maximum clearance they specify for the TS250/1. For the ETZ this is increased to 0.10mm, and honestly, you could go a little higher IMO. But it is important to mention these clearances pertain to original pistons, Megu, HAL, KAL, in K20 alloy. Aftermarket pistons may need more clearance, but if it gets in excess of 0.15mm surely work is required.
I guess crown = crest, and I just measured an old Megu of mine, where the crest is about 0.13mm smaller than the skirt.
It seems you made a typo, or your piston has in excess of 1mm clearance??? The standard bore is 69mm, and 'no lip' is good.
Note there is also a recommended way to measure a cylinder (and the MZ way is very much the common standard way).
Well, of course the squish size does influence the compression. While the idea behind squish (and the shape of the combustion chamber inside the head) is to enhance turbulence in the mixture just before it ignites (to enhance combustion), obviously if you increase the squish by a height of s mm, in a D mm bore, you increase the size of the combustion chamber by s*¼πD². So for a 69mm bore that's 3.74cc per mm, while under normal conditions the volume of the combustion chamber is quoted at 27cc. So if you have 0.5mm too much squish, you have increased the CV to about 29cc, hence reduce compression, and loose a bit of the swirl effects; but it should still run I guess. Nevertheless, I'd go by the book on this.
I have no experience with a 'vellerman k2543 kit to assist ignition', but I don't think it is required, and it might contribute to your problems? My ignition is bog standard/original points, and that works fine. In bikes like this, I think millions of people have used a standard ignition for decades, maybe try it without that vellerman gizmo? What is it supposed to do?