Yes, I remember this problem in the past...
I think you're right... The pull start bearing assembly is getting stuck. A common misconception is that this assembly needs to be oiled. It needs NO LUBRICATION. Oil attracts dirt and grime, which actually gum up the works. The "bearing" are really throwout bearings -- when the engine is spinning, the little bearings are spun into their holding places, and there's no friction on any of the parts.
However, when the assembly is oiled, dirt and grime make it so the bearings don't always "throw-out", and get stuck, and cause your problem.
I went and took some photos of a junk engine I've got.
Quick Tip: Note the little tiny hole on the end of the starter shaft thing that you exposed once you've removed the pull start outer cover. If you use a spray attachment, you can spray carb cleaner into the starter assembly without further disassembly. Try this first.
If that didn't work:
Take the pull start cover off. You'll see the wire mesh. Take that off with a 1/4" socket. At this point you can either take off the starter clutch if for some reason it's been ruined (unlikely) by blocking the flywheel and using a large plier set/pipe wrench. Or, you can remove the starter cover with a screwdriver, cold chisel, etc, with a quick tap between the outer cover and the aluminum housing.
You'll see the bearings. They should be free of grime. If not, spray them with Carb cleaner until they are. Replace all the parts and you should be in business.
