I think the 20lb. flywheel will be fine. I would make it modular if you can, i.e. make a hub that you can change plates with. Most individuals that I have talked with for that class are using a little heavier flywheel with the shorter stroke engines, but the stroke in your engine has a considerable difference in stroke so you will not need as heavy a flywheel as others in that type of class.
I may have your engine confused with someone else, sorry. If you are using a stock stroke 16 Kohler then 20 lbs. will work ok, but 25+lbs. will work better for you as long as you get the engine spun up on the line and let the engine with that flywheel combination do the work on the other end of your run.