The original N/A 3204 and 3208 engines only had 2-ring pistons for years. This was Cat's way of producing a "low-friction" diesel engine that could match the responsiveness of the big gas engines of the day.
Remember that the 1100 series, the original basis of the 3208, was produced for Ford in 1967, at Fords request to Cat, for fitment to the Ford "heavy duty" trucks (my perception of heavy duty, and Ford's perception of heavy duty are different). The 2 ring piston design generated a lot of blowby that was collected via a blowby collector.
The 3 piston ring design for the 3204 was introduced when the engines had turbos added to them, and the blowby became too much to handle. In any operation involving regular hard work, the 3 ring piston of today is a far better choice than any 2 ring design.
By far the weakest part of the 3204's and 3208's is the conrod little end bushing. Failure of these bushings is generally the reason for any 3204 or 3208 throwing a rod through the block.
When rebuilding, if it's still available, it's advisable to use the genuine Cat little end bushing, as Cat improved the design/materials over the years, and they're better than any aftermarket little end bushing.
The 3204 can put out 160 reliable HP in the right application, they're quite a good little motor for light-to-medium duty work. Cat will tell you straight out, these engines were never designed for "heavy duty" work, unlike the rest of Cat's industrial engines.