Classic engine requires stock style cases, jugs and cylinder heads. Aftermarket is OK if it emulates the original parts, i.e., repro air cooled stuff is OK but water cooled parts would not be allowed even though you could convert to them. You also can't go past an .050" overbore, so you would be at somewhat of a displacement disadvantage in a 500cc class.
You can port, you can use bigger carbs, I would think you could use different reed valves, you can modify for higher compression, and it is correct that the exhaust can't go past the rear tire. But expansion chambers are fine.