Honda tried a lot of different engine sizes from 600 to 800 cc before settling on the final 673 cc version. The reasons for making it "only" a 650 was several; it was the best compromise between complexity, cost and power, the engine and bike could be made lighter than a full 750 and the competition all made 650s. Kawasaki KZ 650s, Yamaha XJ 650s and Suzuki GS 650s all sold well enough to encourage Honda to enter. All of the competition made 4 cyl. inline engines, making the Honda stand out.
Many were disappointed when Honda released the 650 - they wanted a full 750 capacity. "Just ride it" was Honda's reply. Few did, especially the magazines were reluctant. But when they finally got around to testing it, they found the engine to be much better than anticipated. It pulled like a full 750 from low revs, and although it didn't have as much top-end power as a well-tuned bigger engine, it performed flawlessly where most people rode - in the midrange.
To make the 500 become a 650, Honda changed almost every part on the bike. The crank got big'er journals, the gearbox was made of stronger material, the clutch was reinforced and so on. Curiously enough, Honda decided to put smaller carbs on the larger engine, down 1 mm to 34. This was done to help the engine produce more power in the low- and midrange. Compression was dropped a tiny bit, from 10:1 to 9.8:1, but that didn't make much difference. The camshaft had much more lift and a bit more duration, and the end effect was a claimed 64 hp @ 8,000 rpm. The old 500 had 50 hp @ 9,000 rpm. Both figures are from Europe - the American way of measuring power meant that the rating was 2 or 3 hp lower. The actual performance was the same, though. The 650 could cover the 1/4 mi. in about 13 sec., one sec. quicker than the 500.
Honda made 5 versions of the 650; GL 650 and GL 650 Interstate - both standing out from the competition in being pure touring bikes, the CX 650 C - competing against the KZ 650 SR, GS 650 L and XJ 650 Maxim, the CX 650 E - going up against the KZ 650 C, XJ 650 Seca and the GS 650 G and E. Finally the Turbo competing with XJ 650 Turbo and XN-85 (GS 650 Turbo).
When going from 500 to 650, Honda took the opportunity to reinforce the chassis as well. The fork went up from 35 to 37 mm stanchion tubes, the frame was made from larger tubes and suspension received stronger springs to allow them to operate with lower air-pressure. This made the suspension more compliant due to less stiction. About the only parts left over from the 500 was the oil-filter and drive shaft. The drive shaft was used on the CX/GL 500 & 650, the CB 900/1000 C and GL 1100 - it's that strong!
The 650 never became as popular as the original 500, and Honda decided to drop it after only one year of production. This, more than anything, has helped the bike receive a strong following it experience today.