Yes, the cam bearing need the grooves. They are not normally replaced during an overhaul

Yes, those look fairly typical for used pistons. Brown or black oil heat marks are common

Valves not coming right out usually mean previous owner did not regularly adjust the valve lash, and the tips of the valves got hammered

Be sure to measure (and probably will need to replace) the valve guides, which is the #1 wear spot in the A-series engine

Water pump seizing could be caused by rust. The most tell-tale of overheating is if the head is warped. To check for overheating damage do this:


When my engine massively overheated the head was warped 0.020 inch -- 10x the standard! Coolant ran out of the spark plug holes