Gotcha.

So in reality you could probably run this engine as is and over time it would restore compression as the cylinder walls clean up? Not ideal but probably fine if it was in a Tahoe.

 

That seems to be the theory, and it makes sense in my head. As long as the pitting isn't bad enough to hurt the rings, I'll regain a little compression. hopefully it'll be good enough for what I'm doing. Basically I'm trying to do the swap and worry about making the engine good a couple of years down the line. If it drives down the road for now, it'll do what I need out of it.

 

You may actually gain most of the compression back, The valves likely aren't sealing because of the surface rust, The rings are probably not moving freely and the rust will keep the cylinder from holding pressure, Most of that will correct itself within a couple hours of run time. Compression readings are always better with a warm engine rather than cold.

 

I've got the whole head apart and some of the valves soaking in seafoam right now (experimenting to see how well that works). I'm pretty sure that's the vast majority of my pressure leak, but all I can do is throw it back together and find out.

 

You could even just run that cylinder to the bottom of the bore and just lightly hone the top to knock that rust off, just use a lot of oil when doing it and of course clean that cylinder out good when done. But its also not much trouble to pull the piston out either if you have a ring compressor soooo......
either way you will be fine, even the valve rust will typically cure itself as the valves wear back in on the seats, I would use a little valve lapping compound on the exhaust valves to smooth them up.

 

The best stuff i used for cleaning carbon is Berryman's B12 chemtool. Works way better than seafoam and is also cheaper.