I think the motor looks pretty clean except for the sludge stuff in the water galleys! When I took mine apart it literally had carbon wrapped around one of the lifters. I had to knock it off with a hammer it was on there so thick. I had to have a rebuild.
The valve train, cam, and lobes look clean. I would get some assembly lube and smear it on the cam just like they do for a break-in procedure. Find someone who can lend you a priming tool or buy one for $18. At this point you only have less than a dozen bolts on each side to get the heads off. Then you could really see where you stand with the pistons and If all looks good and there is no rust, loosen the belts and you can turn the motor over by hand to see if it is frozen. If that proves to be good I would coat the walls of the pistons with oil. Clean the water galleys in the heads as best you can and put the heads back on with new gaskets. You will need to flush the coolant out once you get it back together but now you have a better idea of where you stand.
