Everywhere I look , where I see corrosion , it is where oil would be in contact with the internal parts . A cylinder has corrosion on the wall , crankshaft was sitting in water infiltrated oil , lifter passages caked with corroded oil deposits , no doubt , inspection is needed , and not just visual ,
hot tank and magnaflux . Pistons are clean on top , for example . That is usually done following cylinder head service . This raises a lot of questions . But I agree with you , I would feel better if a rebuild were done . If cost exceeds replacement , would you be willing to put an injected 4.0 liter in or is an original carburetored engine what you'd like ?