Baking soda blasting will clean the engine real well without harming them. There is a master cylinder you can use from a /7 BMW but you will need to replace the lever perches and switch gear as well. On my /6 I bought a better disc, stainless line and better pads- made a huge difference. Been so long I've forgotten what they are but check San Jose BMW ( CC products) and Bob's BMW for upgrading parts.
Progressive springs in the forks and better shocks in the back will help a lot too.