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KLX300R seized engine/possible engine swap

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I have a 1999 KLX300R which I bought this past April (2017). I only ever ride it on the weekends for no more than an hour (time constraints). Since I bough it, it has always ran hot. The oversized aftermarket pipe it has constantly heats and burns my leg, just from those hour rides. I've dropped it twice and both times the coolant boiled afterward, but it doesn't boil when I just riding it normally. Just this past weekend (late July), I went riding with some friends and put some hard hours on it. As I was coming in for a break I pulled in the clutch and the engine immediately stopped and locked up. I got off and tried to kick it over but it wouldn't budge. I let it cool down then rolled it back and forth in 6th gear to free it up. It starts and runs smoothly now, but there sounds and feels like there is something rattling around in the top of the cylinder.

 

What should I do? Can and should I try to swap another engine into it? What could the problem be? broken piston ring? broken valve/shim?

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