The engine sounds like it has seen better days. I'm with DavidG, better check the main bearings and the rod bearings - might as well.
To me, once you get to this 'phase' of the project and things are looking rough (valve chamber, bores, etc) - it will be easier to pull the engine, get it on a stand and really take a close look at everything. I'm sure you can make a "runner" out of it, but is that really what you want? This is a pretty big ole' truck - having a weak, under-powered engine doesn't sound like much fun to me.
Me - if I was planning on keeping the truck and driving it, I would probably rebuild the engine. Seems that just about every engine I get into - needs to be redone . . . just the way it tends to be! LOL
Best of luck - love your truck, your enthusiasm and your practical methods of getting it back on the road. Keep the posts coming!