The essence of hopping up an engine is to make sure it is fitted correctly, improve the balance and improve the airflow through the various passages. I never mess with the timing!
I start with total disassembly of the engine and a review of how it fits. With the crankshaft and case completely dry, the crank should spin over a couple of times when you snap it with your fingers. If not, I polish the crank down to fit. I DO NOT lap it to the case. 1/2A engines don't have bushings, and it is really difficult to get abrasives back out of the aluminum. I chuck the crank into a drill press on low speed, and wrap 600 grit paper soaked in oil around it. When it fits the case well, I do it one more time with 2000 grit.
The piston and cylinder would, in the ideal world, fit tightly. This allows you to add a bit of taper to the top of the piston and bottom of the case (not required for Tee Dees, Norvels, and the like). 600 grit paper held in your fingers will do an adequate job! You just want a hint of taper, the Tee Dees used about .0002" at the top.
The Cub crankshaft needs balancing. I grind a flat from the side of the crankpin to the middle of the crankweb outer diameter on each side. The top is sort of triangular, the bottom retains its half circle. Then I drill a 3/64" diameter hole down the center of the crankpin just to above the web surface.
Generally, I have found the entry to the crankshaft port is very rough and even has a nasty ledge sticking out into the airstream. Clean that up with a Dremel and diamond point grinder. A little bevel at the outlet won't hurt either.
The bypass holes are often blocked by metal "flash". I not only clean that out, but bevel the inlet a bit too.
The stock needle valve is awful, it is blunt ended with almost no taper, it is more like an on/off switch (or off/off ?) I like to substitute the needle assembly from the C*x RTF engines. You can glue it in with JB weld, and be a happy camper.
Clean and reassemble the engine. I like TriFlo oil as it has teflon in it. Can't hurt!
Since they come with pretty low compression, Cubs like hot plugs and lots of nitro.