Motors like air, and the more air you can get in there, the better! If you've got at least 2k on your motor, synthetic oil will be fine. You might have to adjust your carbs a little to match the air flow. Good luck.
A K&N is not going to help you unless you also change the exhuast and rejet the bike.
I put one on my bike (all stock) and did not notice any gains, I actually got some flat spots becuase the engine was running too lean at certain RPM.
My buddies bike however was running too rich after he added a full exhaust (it was shooting out fireballs), when we moved my K&N to his bike it smoothed his out, leaned it out to the right mixture. He dyno'd at 107.7hp on his 02 after that, very nice.
So while more air is better, its only better if you adjust the bike to use it.
Why don't you send the $60 my way and I'll come over with my magicmarker and write K&N on your stock filter. That way you won't loose any horsepower but you'll have those magical letters on your filter
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