Nice job with the starter. Did you give it a test? You can toss a set of jumper cables on it and hook it to a 12v car battery for a quick test - it should pounce to life.
The corroded part of the upper case would be covered by the carb shields, if you choose to use them. My engine was the same way. I'm assuming it was where the mouse nest rested on the engine. The mouse urine eats away the aluminum.
Regarding the 'wire ends here' portion of the new stator, I downloaded your picture from Photobucket and zoomed in for a closer look. If I'm looking at the same area, it simply looks like the wrapped inner windings - I didn't see anything that appeared to be cut or damaged.
These key switches are needlessly complex, serving as the headlight/tail light switch, too, among other things. Here's a picture of my switch, along with a shot of the manual that describes the settings. The colors of the switch dots aren't important, but rather the positions are. 2nd dot from the bottom is 'off', moving one dot up is the regular running position (with no lights), etc.
