Is my 125cc motorcycle slow because of a 25% drop in compression?

a 125 cc motor is really not designed to give you a real great top speed. the only tests i'd advise would be a head presure leakdown test just to verify its rings are seating well. a smaller sprocket will give you some top end. your compression test was supposed to be the wet test by the way so it was good. I like using genuine Honda parts myself anyway. a larger piston would help as it increases your cubic inches and thats power. Id also try jetting the carb and porting the exaust a bit to get a tad more.