You can use the stock head, there are high comp heads out there and they came stock on some minarellis but aren't super common.
You'd have to ream the conrod to fit a needle bearing, or use a different crank.
I opened up the case so that it is even with the inside of the kit, which is probably what was done in that picture. That means the top and bottom indentations disappear. Its up to to you, its less flow resistance but also going to cause lower air velocity because of more crank volume.