For years I've used a fine wire stainless steel brush in a pneumatic rotary grinder handle for jobs like this, and the combination makes short work of the combustion deposits without harming the underlying metal. It does make a bit of a mess, so make some space around where you're working, and wear your safety glasses to keep the crud out of your eyes. When you're cleaning off the piston, be very careful not to get crud into the engine case or the piston ring grooves or small end of the rod. A little masking tape can be a big help here, as can some more rags stuffed into the case. You can't be too careful here, as anything you miss will end up in your oil and it has a good chance of scoring the inside of the bore, a bearing, or worse.
With everything clean, let's replace the pushrod seals. The old ones can be stuck pretty tightly to the pushrod tubes, so you might need to exert some elbow grease to get 'em off. Try twisting and pulling at the same time. Clean the bottom of the pushrod tube and install the pushrod seals as shown in the photo. The rings on the outside of the pushrod seal will mate with recesses in the engine case, so be sure to wipe these recesses as well.
The cylinders that came off my bike didn't have "O" ring seals around the bases, but a check with the parts man at the BMW dealer showed them present in the assembly drawings. The cylinders had an "O" ring groove, so I elected to install the "O" rings. I also decided to use Threebond sealant at the cylinder base, as this or something similar was used by the factory. I knew this because I had to scrape off the old stuff, and wipe the remaining traces away using a chemical solvent. As a last step prior to reassembly, I coated the outside of the pushrod seals with silicon vacuum grease to that they would slide into the engine cases just a bit easier.
For this next step you're going to need a ring compressor. Don't get excited about having to buy a costly BMW tool because you'll find one as close as the corner hardware store. Just find a hose clamp big enough to go around the piston and wide enough to cover all the rings. Should cost a couple of dollars at most.
Now let's check the orientation of the three ring gaps. The piston has two compression rings and an oil control ring, and the end gaps of these rings shouldn't line up. I like to orient them at 120 degrees around the piston. When I checked this motor, the gaps on the right side were all in alignment, so it pays to pay attention to this detail. Maybe it's just my imagination, but oil consumption is down and the motor feels a bit peppier.
Time to install the ring compressor. Open the hose clamp enough to slide over the rings, then position it so it covers them. Carefully tighten the clamp, making sure it stays centered on the rings and that the rings are compressed into their grooves. Stop when the clamp is snug, but you can make it move along the axis of the piston. Start the cylinder onto the studs with the push rod tubes facing down and guide the piston into the bore of the cylinder. The cylinder will butt up against the hose clamp, and as you push will move the clamp down the piston until the rings are inside the bore. If you feel resistance stop pushing, as one of the rings may have slipped from under the hose clamp and is hitting the bottom of the cylinder. If you force things you'll bend or break the ring, so take a second to see what's going on. When the clamp is beyond the rings remove it by unscrewing the worm until the end of the band comes free. Take one last look inside the cases to verify that you haven't left anything in there and slide the cylinder home.
Lay a new head gasket on top of the cylinder with the two big holes toward the front of the bike. The gasket has a top and a bottom, and as you can see from the right hand photo below, if you get it backwards it will cover up some of the pushrod tunnel.

Now you can put the head in place on top of the cylinder with the exhaust port facing forward. It shouldn't want to go anywhere, but start the two central nuts onto the cylinder studs to make sure it doesn't get away from you. Drop the pushrods into their tunnels and reinstall the rocker towers. This job is a little easier if the pushrod is not
riding on the cam lobe, so put the bike in gear and turn the motor over with the back wheel if you need to. Do one tower, tightening the securing nuts until the tower is flat on the head, then rotating the back wheel until the pushrod for the other valve drops. If you get the piston at top dead center on the compression stroke both pushrods will be on the flat of the cam and you'll only have to monkey with it once. With all six nuts snug, it's time to start applying torque. Get out your trusty torque wrench and set it for ??? ft. lbs. Start with one of the central nuts, then go to the one opposite it, then to one of the rocker towers, then the one diagonal to it, then back to the first rocker tower, then to the last nut. Don't run the torque all the way up to the desired value in just one go, but make three or four circuits of the nuts, tightening them a bit at a time. Continue your laps around the cylinder studs until none of the nuts turn at the specified torque setting.
Unless you're very, very lucky you'll need to adjust the valves at this point. Put the piston at TDC on the compression stroke by rotating the rear wheel (the bike should be in 3rd or 4th for this). Break the lock nuts loose on the adjusters and get out your feeler gauges, ??? for the intake valves, ??? for the exhaust. Slip the leaf of the gauge between the pushrod and adjuster and tighten the adjuster until you feel a light drag when you move the feeler gauge. Put a wrench on the adjuster to keep it from moving and tighten the lock nut. Check the valve again and you'll probably find it a bit loose, so break the lock nut loose again and turn the adjuster a little bit to put more drag on the feeler gauge. Tighten the lock nut and recheck, repeating as necessary to get the right feel on the gauge.
All that's left now is to reinstall the valve covers, carbs, and exhaust. Oh, and don't forget to do the other side! With everything in place, take the bike out and go for a nice long ride. The idea is to get the engine good and hot to put a good squeeze on the head gaskets, but not to let the motor cool until you get back home. Then, when the engine's stone cold again, retorque the heads and readjust the valves. That should get you by until the next regularly scheduled maintenance (3,000 - 5,000 miles), but it doesn't hurt to repeat the head and torque cycle one more time, especially if you're about to leave for a long trip and retorquing might be delayed past the regular maintenance interval.