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Did you mean 1.5hp mate, or is this engine actually .5hp? I am guessing you are dealing with one of the 68-70 versions of this little OMC engine.
If so, these engines are pretty simple and reliable, they run pretty well also for being just a single cylinder. But, when they are mechanically “worn out”, they exhibit some common symptoms. They are hard to start, have a very poor idle, and a lack of WOT power output. Unlike many OMC outboards, these little engines are not very forgiving when it comes to a worn cylinder or piston skirt. I don’t know why, but have experienced enough of them with these symptoms, and wasted too many hours trying to “tune up” or rebuilding carburetors trying to overcome a worn out powerhead.
I don’t understand what you mean by “…a smaller free gap as the new rings”…. I do think that ring design changed over the years of this powerhead, so newer rings might have different end gap specs than the original specs. You mention low compression, what readings are you getting? Did the engine run OK before you tore it down, or is the engine new to you and you just went ahead with rebuilding without running it?
In any event, if the powerhead is apart, I would spend the time measuring the piston skirt and cylinder wall very carefully….New rings might raise compression readings, but they won’t compensate for a loss of primary compression due to worn piston skirt/cylinder wall…..