Oil Starved Engine Disassembly.

If you think it is rust that is sticking the pistons, Try soaking with Evap o Rust. I soaked some Dunstall muffler ends to free up the nuts that hold the baffles in, after a few days they suddenly were "finger tight" and came out with no effort.
 
Considering the condition of the engine, you are probably not loosing much if you cut the studs off, then split the cases. You may still end up cutting the pistons though. A previous comment about possible stretching the rods should also be considered.
What are you actually trying to save here though? The crank may be usable, but the cam and lifters are also probably damaged, the rods are suspect, as are the bearings. The valve gear will need careful inspection as well. To judge from the photo of the front sprocket, there's probably not a lot of usable bits left on this engine & gearbox.

Seems like a lot of work to avoid simply sourcing a better example from Fleabay or similar.
 
Update - I managed to remove the cylinders by cutting off the tops of the pistons using a door handle cutter (thank you Grandpaul) them ground through the walls of the piston skirts with a dremel. A long, dirty hard job but it’s all apart now. Note to self- never buy another project with a locked up motor caused by oil starvation. This is on me as I looked inside the oil tank when I was viewing the bike and saw no oil present. I thought - that’s weird.
 

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Is there ANYTHING salvageable in the engine?
Actually there is. The cases are good. The crank seems to be fine. All the timing gears are good. I lost the rods due to my poor judgment when cutting the piston tops. The cylinder bores can be machined. I’m actually relieved it’s not as bad as I thought it would be. I’ve seen worse.
 
Do you mean the remaining components look good to your eye or have they actually been speced out and measured for tolerances, structural integrity and fit?
So very often an attempt to resurrect the old ends up costing more than the new, especially when damage level heat is involved.

In my other life I rebuilt a heat damaged eight cylinder block. Vintage block, valuable. Measured it, cleaned it, "sonichecked" it, ultrasonic hot tank then bored and sleeved it. It was beautiful. All new rotating components/assembly, new heads, manifold yada yada yada.
Had it on the test stand and fired it up, ran great. Then on to the dynamometer where it seized up faster than a knife fight in a phone booth.

Cracked bearing girdles from the previous heat damage. On a cast-iron block, those cannot be fixed.
So I got to buy a bunch of new parts twice but I did get a new boat anchor out of the deal.
I really do hope it works out for you, but consider having remaining components professionally checked before using.
 
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