Unknown mileage (prob high) 6.0 LS (LQ4) with 317 heads, I can't read the block date code but its a Gen 3 due to the rods so I assume the 99-03 head bolt sizes. Did a leakdown test and all are in the 20-33% range but #2 is like 55-60% loss (new LANG leakdown tester). This was done on a cold motor on an engine stand that was yanked 2 months ago from a running vehicle which I saw run and sounded fine (had no exhaust but reved fine and didn't miss). There is no oil in the motor and has been drained for at least a month. I did not get alot of leakage from valves and sounds like its coming out the timing cover (no seal installed yet) which makes me think the rings are the culprit. I've been instructed to pull the heads and at least pull that piston and hone/re-ring. Ideally I would rather not but I'm not in a rush and pulling this apart later in the car will be even more annoying. I hear leakdown should be on a warm engine which is not possible. I tried hitting the valves with a deadblow to seat the valves more but like I said its all going into the crankcase.

So here is what I'm thinking. If I pull the heads I'm just gona yank the pistons/rods and dinglebury hone (leave the crank in likely) all the cylinders. Then swap the rings after cleaning/inspecting the pistons and bearings. I was gona go with moly top ring which are cheap but also require a 380grit finish right? How do I spec the right ball hone for the 4" bore? Then I need to figure out the correct gap for the rings... or do I go with a gapless style ring? This motor is lowish HP and boost like 500-550hp so I don't want to go crazy or need crazy parts. Boost is set around 7psi with the 70/70 turbo and I can't push motor beyond 550hp due to the trans and rear end.

I already have summit 7.4" 5/16 .109" thick moly pushrods, Summit Stage 2 8701R1 cam, Cloyes timing set, melling 295 HV pump and Summit LS6 valve springs. I have already installed everything on this motor except the valve springs. Clearly I wasn't expecting to find this after hearing it run fine.

1. What rings should I go with and what gap? I was looking at https://www.summitracing.com/parts/hsn-2m4860 but open to others.
2. What grit and style hone? How do I size the correct one for the stock 4" bore. I'm assuming something like 3.85-4.25" and keep the RPMs down with a WD40 lubricant?
3. Head gasket... LS9, or aftermarket 5 or 7 layer like BTR?
4. I will likely do Dephi lifters and new GM trays, the engine will not rev beyond 6-6500rpms
5. I just got a great deal on ARP head bolts so I will use them.
6. Stock rod bolts are reusable right?

Anything else I might be missing? Is this even worth it or should I just send it?