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Have you considered the coils? They will run cold but after a while when they heat up something inside shorts. This is exactly what happened to my brothers KZ1000. Twice (before we figured it out) we got 15 miles into a ride when he lost 2 cylinders on the same coil. The weird thing was the coil that was working was leaking some kind of goo. The bad coil looked fine. Give it a shot. They're cheap. Cheers.

Corey,
I actually installed a gravity fed petcock, because the stock vac one was corroded and leaky. The bike revs up to 8k no problem but when it warm-up its running too rich and dies from a slow rpm range to about 4k. I

Hey guys just want to check back in, as I have been working hard to figure this one out.
So LoudHVX was on the right track, as the plugs on the TK26's pilot jets NEED to have o-rings that seal the pilot jet from the float supply of fuel. I was missing 1 o-ring and the rest were stock from the factory(83) and were shriveled up and cracked. This was creating a rich environment that allowed the bike to start easily without choke, but as soon as this cold blooded bike warms up she's too rich on the pilot and dies. I checked my plugs and they were getting blackened as well. Also! the secondary intake on the H2 had a worn foam filter that I ignored previously and got some uni filter foam and custom cut it for the holding bracket.
--So I got the o -rings replaced and was able to seal off the pilots. Now the bike starts with choke cold.. but warm up is quick, and she runs amazing at Stage 1 settings (DynoJet #80 Main, 3rd clip Needle). Bike idles in stop and go traffic like a true thumper and at 45-55 degrees (F) the fuel screw is 2 3/4 turned CC, the low rpms are snappy and responsive. Top end is great for about 20 min at freeway speeds and starts to get a little poppy, I may have to adjust needle or mains, Thanks for the help guys

Glad it's going in the right direction!
Thanks for the update.