What symptoms are you looking for to determine lost compression? If everything is nicely lubricated but not tight, and with lots of compression, if you pull the propeller through the top of the stroke the engine should resist you going up, then help you going down. If it does this -- good. With a really good seal you can pull the thing to TDC and hold it a bit, then go the rest of the way without any 'suck back'.
And why do you think it's the piston/liner? If your compression is leaking down you should diagnose where. Give it a good prime, look through the exhaust port, and turn the prop through TDC. If you see a few bubbles next to the piston that's normal. If you see _lots_, then you have a bad piston/liner seal. Squirt some fuel between head and case, between head and glowplug, and around the glowplug stem, then turn the prop through TDC. Bubbles indicate leaks, and you shouldn't have _any_ leakage at any of these points. If you do, correct them.
A nicely fitting piston with a groove will (probably) retain oil better. A poor fitting piston with a groove will just leak with style. Given that these were reputed to be good engines back in the day, I wouldn't mess with grooves.
I have no clue where you can go if you need this refurbished -- I haven't flown any of my 'big' engines long enough to wear them out.