An important bit of progress.

The cylinder head is finally back from the machine shop and it's as good as new, if not better. This is an expensive job but it's one of those things that just has to be done if you want the end result to be a reliable engine, where every component does what it's supposed to at its best and for many thousands of miles.
A thorough sand blasting, new valves, new guides with oil seals installed (on all four valves), new valve seats for unleaded fuel and truing of the contact surface with the cylinder barrel. Then, because Peppe is such a swell guy, he cleaned the inlet tracts properly. However, I had to hold him back from porting the crap out of them: you turn your back for one minute with this guy and he turns any engine into a snappy, angry beast.