The lever operates the magazine cut-off. Open the bolt and look inside the magazine (where the cartridges are presented to the bolt) and you can see the cut-off shaft in action as you flip the lever.

The front sight blade is held in place with a small pin and can be replaced after driving the pin out. It's reasonably easy to make a sight blade of any height you choose from sheet steel, with no more tools than a hacksaw and file.

The thumb lever on the right side of the piece is used to make it into a single shot rifle if the lever is down, and if the lever is up it is to open the magazine of five rounds for use.  It was an attempt by the Ordinance Board to decrease the amount of ammunition used or in their eyes, wasted in combat.  Many soldiers paid for this economy with their lives against Spanish troops armed with stripper clip Mausers which had a faster rate of fire and a more powerful round.  As for getting a taller sight, S&S Firearms sells nice repro sights and a good gunsmith, though difficult to find, can do the work of replacing the front sight.  Wayne Todd