8) martin, i say tear it down and check it over before you toss the motor. i think the small six can easily be bored .040 with no issues. as for the rust, that is usually going to be surface rust unless the motor has been apart for more than 30 years.
There are still components that are salvageable even if the block is trashed. Keep the caps, crank, cam, all externals. Strip it down and see what can be done with the block.
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