that does not look like a concession kart.. that looks homemade..
(well made but at home not by a company.. you do not see too many professionally made karts with square tubing for good reasons

)
modelled after some dirt racer I'd say (maybe dad was dirt racing and made that for his kiddo *shrugs*)
Anyhow, yes keep the large sprocket you will very likely need it.
the 212 should be a good enough engine for that thing, it looks a bit bulky and heavy, I agree,
but I doubt it actually is, the corners are very nicely bent with a bit of heat and a roller it seems
(the rear corner to me looks like the roller left the indentation.. and judging by that .. and the crisp corners of the tubes.. it's thin walled)
so overall not too heavy for a 212 IMHO
'sid