Conical (tuned 2 cycle) mufflers.

 

The melted bolt would seem to indicate too high a EGT. Maximum EGTs can get to 1900  degrees.

 

That is also too hot for steel based apex seals.

 

While piston engines produce best power just rich of peak EGT. (and melt pistons just a few more degrees higher) the rotary needs to be a bit richer for best power. On the dyno even high 1500s is OK for great power. Thus the poor mileage. At 1600 degrees and about 12.7 to one F/A you get good power and long life. For long runs and better mileage, you can quickly lean past peak EGT to attain lower EGT. Much lower with a high performance ignition system. Less power of course but then much less fuel is being used. 

Consumption on the order of .666 pounds per HP hour is typical of race engines at best power.

 

The double conical mufflers on Karts and dirt bikes are very involved and use reflected waves to push overscavenged mixture back into the cylinder of a wildly ported cylinder. This is used to perk up the dismal low RPM torque of a rather narrow banded engine. Typical to have different mufflers for each of sevaral tracks. Notice that the actual size of the exhaust pipe may be tiny between an inch and 3/4 inch. 

 

Compare the EGTs of a rotary and a 550.  

 

Lynn E. Hanover