I think the 2K2 wiring exits at 10 o'clock position (same as your 2K1?) and the 2K3 exits at 2 o'clock. there are a ton of threads on here about the subject so a search might be your best bet. I can't answer your question about the DC conversion. I never had the need to do it so have skipped most of those discussions. Someone else will surely chime in shortly.
As far as the 2K3 creating "mechanical issues", not sure exactly what you mean. The new stator (if you convert to 2K3) will have the harness to fit. They were used on the same bikes depending which model you had. I think the plug changes with the newer models but colors of the wires remain the same. Not sure at what point that happens. 200, 250, and 300 engines will run the 2K2 or 2K3 with no issues as they all used one or the other at one time or another. The 2K3 is also kind of like adding a flywheel weight. back in "our bikes era" the CDI boxes were also switched on some models to change the performance. I might be wrong but seems your "MC" and my "XC" might actually be using the 200cc CDI box.
My bike (2K2) performs completely different than my kids bike (2K3). Like CR Honda vs XR Honda.