One more thought: take some paper towels and ATF. Wet each cylinder by hand and wipe the walls. If the paper shows gray material (from honing) then I would definitely take it all apart. 

Maybe the intake is warped as well? Take a steel straightedge and with a feeler gauge, check both sides from end to end and top to bottom (length wise and height wise). 

Ah! Just think how much better it would be if a few left for Yellow Bullet's forum.

Really odd Heo that much rust had formed. Even junkyard engines, 20+ years sitting outside in cold suburban Chicago winters, never had such damage. I do wonder if she or someone else rebuilt the engine.

Point being: was a shop's negligence or a bait and switch deal the real cause? Btw, true that had it been run, oil spray on the internals may have prevented all or some of that rust. I'll add that parking your daily driver in a heated garage after running through road salt all Winter long is known to be asking for rust trouble under the car. Best bet is to wash the underside but that's not really possible on your driveway when it's below freezing. 

None of this makes sense to me. I've had slip joint headers that showed the black marks from exhaust exiting between the joints....never smelled anything, or heard leaks. IF there was anything to hear, it was only at full throttle, where I couldn't hear it anyway over the carb and/or exhaust note. I most definitely never smelled like exhaust from driving, or smelled it at all for that matter.

I agree as it doesn't make any sense to me either. Something under the car must be missing, like a shifter boot, or holes in the floor pan are allowing the smell in. Maybe firewall gaps yet airflow should not allow it. Maybe test the cowl by using some blue painter's tape to seal it off 100% as see if that makes any difference.

Yeah, I wondered about that too. Seems metal does have a memory down into the grain structure. Still, for a drag only car, it may add a 'free' season or so of running. I'd check them closely though each weekend.

Agree with all your points Ross but one sticks out to me. Sticky lifter bores. Having done long ago a number of in-car cam swaps, we noticed that the removed lifters had deposits on the lower (cam side) ends. Taking out the lifters showed similar crud inside the bores, hard to remove even with determined cleaning. We noted that some of the new lifters had trouble spinning in the bores. We went back in with lacquer thinner, acetone and even gasoline until the lifters spun easily.

Yes, if they can't spin, the lobes will go flat in a hurry.