Hi Mitch,
I'll try to address most of your points in turn.
No choke required. Not unusual, particularly if the carbs have been rejetted or the mixture screws altered to 4 - 5 turns out.
Known issue, floats too high. Be clear on understanding here. They are invariably set correctly from the factory. Ivan alters them to achieve a better outcome with his jet kits. Yes, if left for extended periods on the sidestand, the fuel level in the lowest carb might get a bit high but it's not a big deal. Might mean that cylinder misfires until the level returns to normal. There are still thousands of bog stock Gen 1s out there and they're all running fine, just as Mr Yamaha intended. Well, most are ...
Oil level went up/down. Yes, that can happen without it being an indicator of fuel or coolant getting into the sump. These motors hide oil but a long lay-up can result in all of it draining down again.
Recent starting problem. Sounds like a simple misfire, reluctant start afterwards probably because battery voltage a little low. White smoke is usually condensation, topped up with a bit of excess fuel from the misfire. If it was a hydraulic lock, it would have stayed locked!
The carb overflow system is designed to prevent excess fuel getting into the motor. Stuck floats are quite common but you don't find reports everywhere of cylinders filling with fuel as a result. It
does go out the overflows as it should. Trust me on this, I've seen it many times.
Same applies for fuel leaking past the float needle valve seat O-rings. You'll get a rich misfire long before that manifests as a fuel overflow, too.
If you are absolutely certain that the float heights are not right, reset them to 12.5mm. However, to be honest, I still have reservations about your checking procedure. You mentioned the floats barely seating the needle valve. That's not correct. The tang should just be
touching the sprung tip of the needle, not compressing or seating it at all. If the tangs are obviously straight, then they have not been altered previously.
I suggest you sort out the other issues with the main jet installation, check the needles for type and installed height, fit new float needle valve seat O-rings, clean the pilot jets, put it all back together and see how she runs. Check the condition of your battery, particularly if you don't use an Optimate when the bike's laid up for a while.
I wouldn't bother with reinstalling the carb heater hoses. I've never heard of a Gen 1 suffering carb icing as a result of removing it. Too much hassle for zero return. By the way, there's no 'probably' about the carb heater system being the same on every Gen 1 from 2002 onwards ...
I can't help but feel you are over-thinking this and perhaps seeing issues where none exist. Sometimes the internet can be a hindrance as much as a help.