Some may flinch at that but it doesn't look bad yet. Try cleaning it up, maybe lean it to that side and a blast the barrels with a power washer to get the fine particles out then some WD or PB blaster and spray it down,let it soak, Short of ring breakage or gouges you might be OK. I have seen worse get cleaned up and run well again.
I had to come back and add more, If it cleans up OK and if you can re use the old head gasket just for sealing the barrel, even use a gasket compound with the old gasket to test compression, or maybe someone around here has a gasket that has been compressed you can borrow/use.
Just throw the head and belts back on, time the cam/cams , If the other head is off you dont need to install it,just need to time the one side your checking, If the other side is still on check both sides timing..
Thinking that's right, maybe someone here can double check me on it.