I gotta back track with the engine, because I feel a bit like a drama queen.:{. Trying to decipher the picture on the inspection camera in daylight, I really thought the engine was toast. It was only after we pulled the head that the truth was revealed.
Under the carby, Mr Nissan had fitted a a sheet metal air deflector, about the size of a small plastic film canister. About half of the deflector is cut away. This was to make sure every cylinder received the right amount of fuel air mixture.
The cuts made in the deflector are right angle with bugger all radii. So with time the metal has cracked and dropped into the engine. The sheetmetal pieces have been smashed, folded and pounded flat by the valves and piston crown. The big gouge I thought was in the cylinder wall turned out to be a reflection of part of the debris on top of the piston.
I really did think it was bits of the valves. Hopefully the engine builder can check every thing and we can get it going with minimal cost, so I can afford the front locker.