1) Fancy carbs: Most of the time, this works because the original carburettors that most RD owners have are in a sorry state thanks to countless jugaads and clueless mechs. If you have carbs that are in decent condition, save your money for other stuff for now. Else upgrade to a brand and size of your choice depending on your budget and application. I found TM-28s (flat-slide version of VM-28) to be more than sufficient for a street setup. Anything bigger than a 30 will necessiate the use of costlier manifolds. The hassle of getting a bigger (non-stock) manifold to interface properly (without airleaks) with the RD's intake port/reedcage is not to be underestimated. I bought my carbs from Sudco.
2) Reeds: Stock (metal) reeds work best for stock bikes. YZ-125 fiber reeds (3 per side instead of 2, so you need to cut one off before installing) gave me slightly better throttle response but had much shorter replacement intervals. The best reeds in my experience are the VF-3 reeds from Moto Tassinari, but they need the intake tract to be carefully widened. This is a very critical job. I am happy I got this done by Arun in Bombay.
3) CDI or points: I have seen a fair share of RDs that run happily on points, provided they are tuned regularly, but if you plan to keep your ride for more than a few years and ride her hard, it pays to invest in a good ignition system. In India, RDDreams makes a good ignition system for the RDs.
4) Barrels: In other words, the cylinders. If you have barrels that are beyond rescue, I would advise you to buy US-spec barrels from the US or Europe. Ask a friend or relative there to buy and/or have the barrels mailed to him. US spec barrels have better transfers and liner quality than the Indian or South-American ones. They're also cheaper than the crap you get here.
5) Porting: A good port-job will do wonders for how your bike runs. However this is the one modification that most RD owners underestimate the criticality of. If you are happy with the bike's performance, it is best to leave it stock. However if you do intend to have it ported, you instantly become susceptible to myriad "tuners" who at best will give you a mediocre port-setup after keeping your barrels for 3 years, or give you a bad copy of a popular UK tuner's port-setup without really doing much to the transfers resulting in a narrow, peaky powerband and lower engine life, or at worst completely hack and destroy your ports using rudimentary tools to do the porting. The best option in my opinion is to save up for a genuine stage-II port job from one of many reputable tuners in the US or UK. This may cost upto twice as much as the most expensive port job that you could get in India, not counting the expense and exasperation of having the barrels couriered back to you. This option works best if you buy your barrels in the country where the tuner resides, mail them to him, and get someone to carry them back for you after the porting is complete.
6) Pipes: Expansion chambers are single-most biggest enhancer of performance on a 2-stroke engine. Having said that, a bad set of pipes will (like bad porting) concentrate all the power into a narrow powerband making the bike slower than stock or unrideable in most conditions. Pipes are also more difficult to carry back from the US or Europe than barrels. Some well-known brands that work for US-spec barrels, are Moto Carrera, Ricardo, and Spec-II.
7) Boost Bottle: Didn't work for me. A U-tube connecting both the RX-135 manifolds works better. They probably work better on singles.
8) Air filter: Using 2 UNI pods. The good thing is that they filter better. The bad thing is you trade the Y-boot's lovely intake growl for a whoosh. If you have a snug-fitting paper element in a not-too-bad stock airbox, this is another mod you skip, especially if you don't plan to run air-hungry chambers.
9) Front-end mods: Initially i went for an Avenger hub, wheel, tyre, spokes and retained the stock RD fork-legs, simply TIG-welding a mount for the caliper holder. I realized I should have gone the whole hog and fitted the Pulsar-220 front forks as well, because my stock forks were shot. I experimented with springs of varying stiffness and oils of different weights and densities, but nothing helped. I guess the valving was screwed beyond salvage and I didn't trust anyone local to do a good job of revalving them. So if your forks are shot and/or if you need better braking in the front, I would advise you to do complete transplant (triple-T, forks, hub, spokes, wheel, caliper, master-cylinder, braided brake-line, brake lever) from another bike. The FZ and Pulsar 220 are good Indian options, with the front spoked wheel coming from the Avenger. If you are not too keen on retaining the spoked front, it becomes easier to do the front, but then you have to redo the back to accomodate another mag wheel. Abhishek Nakhwa did the transplant for me and I have to say he's done a stellar job.