MYRON - Actually rust, paint, dirt, oil....are ALL very good insulators to block or slow heat transfer from the engine to the air, and the slower the heat transfer the hotter the engine runs. And from testing done at the food & chemical processing equip. company I worked at it doesn't take much of anything on the heat exchanging surfaces to make a BIG difference. A thin film of a nickel oxide coating from a reaction with a synthetic oil and the water from an ammonia cooling system attracted a thin layer of oil onto a pure nickel cooling cylinder and reduced heat transfer 40-50% in these tests. The combined layer of oxide & oil on these cylinders never approached 1/16th of an inch thick and most of that was the oil. And pure nickel is a VERY good conductor of heat, almost as good as copper.
THAT being said, most people including Kohler & IHC assemble their engines/tractors and spray the heck out of them with paint and they still last for a thousand hours and more with reasonable care.
These 30-40 yr old Kohler engines all have terribly rusty cast iron cooling fins on the cylinders, short of grit or shot blasting or glass beading them, there's no good way to remove all that rust, so You have to decide on the lesser of two evils when refinishing Your engine depending on what You use the engine/tractor for. And You have to keep in mind that in the end the fins will end up all rusty and dirty anyhow if the engine is used in a "work" tractor. Kohler tried to keep the really HOT portions of these K-series engines separate from the rest of the engine, like the exhaust ports, and provide as much fin area for dissipating heat as economical casting methods would allow. But You compare these engine blocks to air-cooled airplane or motorcyle engines and there's no where near enough fins on the Kohler blocks.
The best solution is probably a thin plating of copper, aluminum, or nickel on the cyl. fins to resist rust, keep them clean from dirt/oil and make sure nothing interfers with air flow. But I don't know ANYONE who's gone to that extreme.
I would like to add some temp. gauges to the K321 I have in My 72, EGT, cyl. head temp, & oil temp just to see where things actually run. I also need a tach to see how much difference engine RPM plays. That all didn't happen two yrs ago or last year.....Maybe this summer! I've played around on the old K241 with My Ray-tech IR temp gun that was in the 72 a couple yrs ago but the EMI from the ignition system "Fried" the chips in it. Expensive lesson!