I took the bushings and the swing-arm pivot from the 125 to my machinist at work who bored them out to fit on a lathe. They need to have about a .005-.010 larger diameter than the swing arm pivot. Having a good machinist is necessary for these types of projects. If you don't know one allready, get in the phone book and start looking around. I've found that the best (and least expensive) machinists usually have the least expensive looking ad in the yellow pages. Most shops these days have CNC capabilities, but most of what you will need can be done on a manual lathe and mill. These bushings are as hard as the nubs of hell so don't get any ideas about buying a big drill bit down at the local home depot. Once they are cut, they are much thinner, but this should be fine since they only act as a wear barrier between the swingarm pivot, and the soft cast aluminum case. The swing arm pivot does not pivot in them, but all the vibration of the engine would eat away at the aluminum case without having them.
I bought a 87' CR500 for $250 a couple months ago. It was in very bad shape as the price tag might suggest. Before I could even start it I had to do a good bit of work to even get it to start. Once I did get it running, I could never get it to run quite right. It had throttle response up to about 3/4 throttle, then it would flatten out like it was starved for air.
After riding my friend's 89' CR500 which had that mind bending acceleration that CR500 are made for, I determined to cough up the cash and buy a real 500. I found a 2001 for $2000 a couple hundred miles away and had my brother pick it up on the way home from a business trip. It runs like a dream and is an all around great bike, although the 87' has a much sexier shape if you ask me.
I decided to pull the engine from the 87' to use for sizing while I do the frame conversion so that I could keep riding the 01'. There are only a couple differences to keep in mind. Here is a good link to a page detailing the differences among the different engine years: http://cid-76dd2330685afe13.skydrive.live.com/browse.aspx/Honda%20CR500R%20Tech%20and%20Reference/Tech%20Edits%20as%20of%20july%209th
The differences that matters for using an 87' to size up for 01' swap is that the intake on the cylinder is 8mm shorter on the 01' and the swing arm bushings are not the same diameter.
After cutting the bushings, I tapped them back into the case. Now this engine is ready to go into the new frame (as soon as the frame is ready).