Interesting thread.. seen many times before..
Dood, IMHO you engine died due to over heating, but may not have been a lean run. But before you say.. no way, let me explain..
In the 2 stroke industry we call it a "Lack of lubrication" Failure
The exhaust port side of the piston contains temps higher than anywhere else on or in your engine, so it is normal for the piston to start to score there first. This lack of Lubrication can be caused by lots of things. Firstly it does not mean no, or low, or bad oil. It just means that it was unable to protect the engine at the time the damage Started, and may have happened over several gallons of fuel, or several flights. So forget the fuel (If it was not home brew
Secondly, overheating can be caused by a few things. Most common is lean run, but it can also be caused by poor air cooling (Raptor 90 comes to mind), incorrect ignition timing (Head shims)?,air leak, excessive load (Sustained throttle), or Too much oil in the Fuel(yes, it's possible). Whilst 3D flying appears to work the engines hard, it is really a lot of "On the gas,Off the gas" throttling, so the engine does'nt mind to much.
If you run a governor, it can mask a Slightly Hot. or Slightly lean engine run that you would normally pick up. You can't always hear it, and the smoke pooring out the ex is only an indicator of oil temp (Not engine temp) The engine is overheating way before the smoke disappears on a nitro motor.
Yor engine looks to have picked up on the exhaust some time ago, and has slowly begun to eat it's self.. Not uncommon, but not much fun either. Dirt injestion or foreign object would take out the crank inlet & transfers, inlet sides of piston first etc. Exhaust side from heat related issues.. And objects put in there to lock the piston
Don't forget, it's going past the port 600 times a second at 18000rpm.
The oils & materials do an amazing job.. most of the time.
oh, and somtimes, these engines just deside they want to quit.. so think of it as an upgrade opertunity..
Hope that helps a little?