Well, the only way I know how to tell it's really bad is you take the engine apart, insert the piston in the sleeve in the orientation it would run in, apply a bit of oil to avoid scratching the piston or sleeve and push the piston up in the sleeve. If you can easily get the top of the piston to the top of the sleeve and possibly get the piston to stick out of the top of the sleeve (easily again), then it's time for a re-pinch or engine replacement.
Normally, when you replace a piston/sleeve due to wear, the bearings are on their last legs as is the con-rod. So, if you do intend on buying a new piston/sleeve only, check the slop in the bearings and the slop of the con-rod for slop on the wrist pin and crankshaft pin. Any slop means they need replaced or you run the risk of busting them.
If, after you tally up the piston/sleeve and bearings price, you reach more than 50% of the engines new value, I'd buy a new engine, or get the old one re-pinched and start saving for a new engine.
Take a look at this thread to see what I'm talking about with the piston pushed through the sleeve:
https://www.rcnitrotalk.com/forum/showthread.php?t=56420&highlight=pinch
If you scroll down to the "after", you will see what it should look like when you try to push the piston up in the sleeve by hand with minimal force.
Also, as a general rule of thumb, if your having issues keeping the engine running once it warms up, or it blows plugs all the time, or power is lacking, or regardless of tune, it runs very bad, or/and it flames out all the time when running, those are tell tale signs the engine has issues. Be it an air leak or worn piston/sleeve fit.