[Marshall V. Daut]

You will probably need to have the block re-sleeved and start all over. Piston rings will never seat with pitting that deep in the cylinder. Water from a blown head gasket must have sat at that level for years to cause that much rust pitting. 'Not what you wanted to hear, but you are pretty much looking at a full dismantle and rebuild. Anything short of that will be a disappointment and waste of money.
Marshall