Yes it may have been rebuilt, but was it rebuilt right? All specs correct, and no measurements skipped? I dont know why it is, but I have seen numerous tri z sleeves that are cracked on the bottom. Could it have been put together with a hairline crack in the sleeve, then finally it gave out on yours? My next thought is the timing was too advanced. Pull the flywheel and look at the flywheel key. If it is sheared, there is a good chance that may have caused it to be firing before the piston was at TDC, and putting tremendous stress on the piston and lower end. This happened to my Z's original motor, and the con rod broke in half, and destroyed the cylinder, piston, and both center cases. Good luck with the rebuild, and sorry to hear about your misfortune.
THE 80's RAGE! Currently owns:
81, 85 Yamaha Tri Moto 125
83 Yamaha Tri Moto 200 x2
82,83 Yamaha Tri Moto 175 project
85 Yamaha Tri Z 250
84 Kawasaki Tecate 250
84 Honda ATC 70
85 Honda ATC 350X
84 Honda ATC 250R
(2) 84 Honda ATC 200x
82, 83 Honda ATC 185s
81 ATC 200
Lots of other parts and bikes