The 160 rear tire sounds right. I got one on mine and the bike turns great.
As for the splice work, I don't think it matters where you do it, as long as it
is done. I did mine between the motor and the plug. If you are thinking to
race the bike I would recommend rather to run premix as it is a safer way to
spare the engine. It is to easy for the oil pump lines to get blocked with
something and then your whole motor is shot. I hope that I helped you
with something.

One question, How can one fit a 190 rear tyre to these bikes? I have a
160 rear tyre and it fits very snugg. I don't think it is possible to fit anything
wider than a 160 unless it is a different swingarm.