Hi again: my findings on the engine included a very badly worn water pump (shaft badly corroded), likely the main culprit in leaking water into the crankcase. The rear head gasket was quite badly burnt for about 20% of its circumference between the cylinder edge and the water channel. The front head gasket was scarred in the same region, but not burnt through. There was no piston slap and a 'nail test' showed no nasty edges in either cylinder. I was lucky in that a straight-edge test on the head / block surface didn't indicate measurable warp. There was light carboning which I cleaned off, and I re-lapped the valves with fine paste. A cold compression test now returns about 170 lb (throttle open) on both cylinders.
The engine is now running again, with the (proper) coolant keeping up in level, no water going into oil, no over-temp light. The radiator is heating uniformly and the fan turning on / off, something that didn't happen previously.
Now, the idle was too high, well over the lower limit for a crunch-free transmission engagement. This was the case when I got the mule, and before the engine fix. I don't have a tacho, but listening as the engine warmed up it appears that the idle speed increases. At full temperature, the idle screw needs to be fully out to get a just-satisfactory lower limit. The same setting when cold is stalling speed. I cleaned the carb (Mikuni BV26-1
when working on the top-end, but didn't tweak the internals. Any thoughts appreciated.....
Thanks again for previous help. My Mule is the only one locally, so I can't directly compare what it does with another: the site is really useful!