Building a "Big Bore" 5sgte, '98 5sfe Block, 3rd gen 3sgte Head, 3sgte Crank Options

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Hey All,
As some of you may know, I've been doing some work for Jim, building up his Alltrac. ( Click For Alltrac Build Thread )
He came across a deal on a build, 2nd Gen 3s bottom end here on the forum,(from itchyb) and figured we could use that, with a 3rd gen head and oil system to make a nice bullet-proof bottom end to use with a nice medium sized turbo to build a great "street beast" ....~500 AWHP that comes in quick and holds out to redline.
So Jim and his bro, Joe, brought me up the bottom end, and a stock 3rd gen engine set to get started with.
I got the built block up on a stand, and immediately noticed a serious issue with it.
The surface of the block is all pitted, and especially around the bores, like it had been shot with a Shotgun or somthing!
A few pics:









What exactly caused it, I dont know, but what I do know is I definetly wouldnt trust it to seal with a metal headgasket, and I definetly wouldnt want to have the block machined that much to bring it back to flat.
So, I figured to myself "Well, at least it has really nice pistons (it was supossed to have Arias pistons) and good rods (Eagle rods), so we have good stuff to work with" and continued to tear it down.
When I got the oil pan off, it was more "bad" news.
The pistons were not Arias, but CP pistons, which really isnt "bad", but wasnt what Jim was told was in there.
A couple pics of that: (sorry for the crappy quality, the ipod cam isnt the greatest)

Before taking it apart:



Eagle rods, ARP2000 Bolts:



CP Pistons:



Once I had that info, I called Jim.
We talked over the options, and Jim and Joe decided that if we were gonna have to have machine work done, it might as well be on the setup they'd like to do most, which would be a stroker setup.
Jim has Shannons old 5sfe bottom end, which is a 98+ block (the 98+ Celica blocks all are thicker in the waterpump corner of the block) so he said he would ship it up.
Since I still have my 5s bottom end here, I told Jim that we would just use that, and he could just bring up Shannons bottom end to replace it the next time he comes up.
Because MCS motorsports (the guys who built itchys bottom end) had some serious issues before they went under, I wanted to check the main bearing clearances before we did anything else, in case the crank needed any machine work.
The bearings that were in it were all .25mm undersized.
pic:

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The say a pic is worth a thousand words...here are a few thousand..lol
Big updates in the next week or so.