From what you describe if I had it in my shop for you I would have the block bored and install NEW pistons and rings and likely new rod bushings will be needed for the new piston pins. I would also install NEW rod bearings providing the crank journal were round and not tapered. I would also not pull that crank out. I would put a dial indicator on it and measure how much free play it has in the bearings. I'd have to check the book for specs. These are a round bushing type main and that's how the book says to check them so you don't need to tear it all down. For example- a 720 Diesel main like these has a wear limit of up to .015" if I remember right ? which is way bigger than most any other type of engine has. These type of mains are made to run looser than you might think. So put a dial indicator on it and check against the specs. An I&T manual will give these.
On that cyl. head I would pay close attention to the valve guide to stem wear /clearance and would also resurface the top where the manifold seals against if it is out any since these are so bad about leaking manifolds. And of coarse check the head gasket surface and redo if needed.
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