That is a good idea. Years ago I had my 750 housing machined to take a lip seal. Has bee leak free for 40 years or so. I did the same to my 850, but unfortunately when I calculated the depth for the seal, I didn't realise the 850's splines went further into the gbox, so the seal was destroyed after a couple of starts. After a bit od swearing, I got an "o"ring and a 20thou shim. I put the 'O' ring on at the outside of the shaft, put in some RTV silicone the fitted the shim. More RTV then the kick start lever. Doesn't leak now. BTW I made a new steeped bolt for the kickstart and bored the lever to take the bolt. Now the larger part of the bolt engages correctly with the "groove" in the starter spline, and the lever never ever comes loose. [ not like all the other flogged out levers around. }
Dereck