Permatex is a brand of a form a gasket material. It's blue in color, smells like stinky feet, and comes in a tube like tooth paste. When dry it is like a blue rubbery boogie. It's used to help seal valve cover gaskets, oil pan gaskets and the like. It's been around for a coons age and can be bought at every automotive store. Like I said before I use it very sparingly but have come to realize that it really doesn't make a diffence if you get the head and cylinder jug mating surfaces flat.
The goal is to have your surfaces flat, not to sand for the sake of sanding. When I take an unknown engine apart I will sand the head and cylinder jug's mating surfaces to make sure they are flat and will produce a good seal. Unless you scratch the surface or think you may have a leak or a warped part it really isn't necessary. It does eleminate dought if you do it though. The method I use may differ from others, but I've found that around the shop, glass is about the only true flat surface. That said, with the glass on the work bench I lay a piece of sandpaper flat on the glass and tape it to the glass at the edges. I saturate the sandpaper with a light oil, like 3 -1 oil, place the head flat on the sandpaper and sand in a circular motion. Don't get over energetic and keep some down pressure on the head to keep in in full contact with the sandpaper. Start with 400 grit and move up through the grits and use 800 grit for your final sanding.
The mechanics at the shop are right. If you don't know what you're doing you can mess a good cylinder jug up. Here in lies the problem. When you mess with the exhaust port you must compensate on the intake side of your engine. Just increasing your exhaust port will make your engine run like shit. Now if you increase your flow on the intake side by modifying the reeds, intake manifold, and carburetor then you have something. This is also true of jetting up a carburetor. Unless you make provisions for more air to flow through your carb all you are really doing is running an extra rich mixture that will only foul your plug. How much is too much? What is the right ratio? These are questions that I've answered the hard way by screwing up a few cylinder jugs, reeds and carbs.
If you want to enjoy you Batavus and don't have replacement parts available if you screw up then don't try tinkering. I had a few sad stories before I finally got it right.
Lamborn's Miniature Engines