Has the engine ever overheated? Cylinder scoring like this can be the result of overheating (piston expansion). I think it will still smoke regardless of the heads, but I don't see why it wouldn't run.

'91 LWB, 31x10.5s, KYBs, A/T "I look like Robert De Niro, I drive a Mitsubishi Pajero" - Billy Bragg (not the original lyrics, but that's how he sang it when I saw him in Dublin in '04)