dxiw,
Excuse my ignorance, but why would you run her up to 7k rpm in first? You've past the point of diminishing return way before 7k - your KZ550 ain't an R6. Ditto and +1+1 on shoodaddy and elr658, you might want to take their advice to heart. They actually know what they're talking about (having saved my bacon a few times
).
Check compression, my friend... Sorry to hear about your troubles, sounds like it's your daily rider and you're out a ride. That stinks.