When my wife had her ACE 750 I ran Castrol Actevo 10-40 semi synthetic oil in it, the bike ran good, shifted smooth and no clutch slippage.
As for the air filter, K&N is a good filter when used properly. Your statement about the cement factory tells me there's lots of fine dust and that is a concern, if I were you, I'd also run a pre-filter on the K&N. K&N's filter better as they collect dirt, a fresh one will allow some fine particles to enter the engine until they get a little dirty, that's why my dune buggies all ran pre-filters, they stop the finer dirt and dust. If you can't run a pre-filter I'd go with a paper filter.
Take a look at THIS link, it shows the pre-filters.