@Philia_Bear and I swapped the new head on today. The bottom end is in pretty good condition, I measured the bores and most measurements were in the +0.02-0.04mm spec, the worst I got was BDC on most bores was +0.06-0.07mm. For a 45 year old engine it's doing great!
The head was less great, there's a lot of wear on the valves from the seats.
#3 was the cylinder that had coolant leaking into it when the engine was cold. The piston was spotlessly clean, the other three all needed a bit of scrubbing to clean up. No damage to the bore either. Glad I caught it so quickly!
I got the deck nice and clean and flat, installed new alignment dowels, coated the HG in copper sealant, and sat the new head on it, no dramas.
I noticed the aux shaft was 90 degrees wrong, so when we installed the new timing belt I pulled the distributor and relocked it so I could get the aux shaft aligned correctly. The old timing belt was cracking, and the tensioner bearing was toast. New Volvo OEM belt and tensioner.
We got everything back together, cranked the car, got it to run rough for a few seconds but then it died and now there is no spark. I ruled out any mechanical reason anyway, but I think I know why, the wiring loom for the hall sensor in the distributor is toast. I disturbed it while doing the head swap. I have a spare of this loom. I'll probe it on Saturday and see if I'm right.
Was hoping I'd have it all done but it sounds like it will run just fine once I get the no spark issue sorted.