Rust in the Y-Block

I pulled one of the heads on the Y and found good and bad news.

This was what greeted me on on of the intake ports on the head after I pulled the intake off. I have another port on the other head that is just as bad.

After the head was off this is what I found in one of the cylinders.

The good news is it was rebuilt before it was stored there is still cross hatching in the good cylinder bores.

The head has also been modified and an additional hole has been drilled to cool the center of the cylinder head. Which is a good thing. It was rebuilt correctly.

This is the worst combustion chamber (You can see the holes I refer to above easier in this picture, they are to the left of the combustion chamber)

 

So I need to figure out if this is salvageable.