I've never been 100% satisfied with the pegaso rear swingarm. After hours of research, I found that based on photos seen online, that a suzuki rg125 swingarm might work. Of course, those bikes were never imported to North America, so if I did find one for sale, it would be a bit of a leap of faith to order one and ship it here, in the hopes that it might work. Like most used parts in the UK, this came cheap -- 9 pounds. The shipping was a bit steep however.
As you can see, it is designed to pivot on the rear of the engine case. As well, it is set up for LHS drive chain, while the pegaso had to be "flipped" -- it also has a cool, GP-like banana arm style to the right -- intended for the expansion chamber to exit with some more room. Dimensionally, it is quite similar to the pegaso swingarm. However, in some key details it is different. It has also been nicely powdercoated, but that is wearing through in some areas, and modification will require it to be stripped anyway. And, while it has the look of an aluminum piece, it is actually steel. Oh well, that means I can do any of the cutting and welding needed on the arm itself.
The key work that needs to be done first involves skills and tools I don't have. First, the swingarm pivot axle needs to be bored out by 1 mm. In order to use the proper parts, I need to be able to press in a 28x22mm needle bearing. Currently it will accept a 27mm bearing. So the front part needs to be enlarged by 1mm overall. Secondly, in order to use the correct rear axle from the rs125 wheel, the wheel slot and the carrier needs to be bored out to 20mm. My hope is that this work can be properly done in the first place -- so its off to Atom-Jet tommorow just to see if it is possible. I really think it is, but it would require some creative jigging on the mill table for it to work.
Depending on how simply I can get this done, there is a slight possibility I can do this mod over this winter. Luckily, the pegaso swingarm is still "fine", and will be kept as the fallback solution in case I hit a roadblock with this project.