Got it! I suggest that you do a quick down and dirty fix.
Pull the engine, drop the pan and take the head off. Undo the rods and push the pistons out. Don't look at the ring lands except to clean them. Don't pull the cam or cam followers. Stick a set of Deve's rings on the pistons, run a dingle-berry hone up and down inside the bores a few times. Borrow a ridge reamer to take the ridge off the top of the bores if it is really bad and put it all back together with a new set of rod bearings.
When you do the hone thing take care to turn the crank so that the individual rod throws are down while you work on that cylinder. OIl up the bores with cutting oil when you stick the hone in. Also drape a shop towel over the crank while you are doing all of this. Before sticking things back together put a big tray under the block and wash the bores down with lots of clean kerosene and clean cotton cloths to get as much of the ground down iron and cutting stuff off as you can. Take a few minutes to make sure that the tappet cover breather is clear too.
When you get it back together run it for twenty miles or so and do another oil and filter change to get the remainder of the gunk out of the system.
This is not the way to overhaul and engine but you can do it in one Saturday and get twenty or thirty thousand miles out of it, or maybe more, depending on what the mains and cam and followers and oil pump are like.
Cost? Rod bearings, top and bottom end gasket set, down pipe gaskets, the rings, oil, filter and antifreeze. My guess without looking things up is that you can do it for less than $225.00.