Yes, I agree, acceptable tolerances depend on the bore size and style of engine….Generally speaking the cross scavenged OMCs are very forgiving when it comes to some wear, but the loop scavenged models are very unforgiving.
Nonetheless, .010" seems pretty excessive to me, I would say that .003-.004" would be the max tolerance for oversize/out of round for your engine.
Has this engine been overheated? Perhaps an overheat caused the extreme distortion/ out of round/taper condition. Did you run the engine before, or were you just doing a check up for the guy with the compression gage?
Just honing and re-ringing this powerhead would be a gamble, but it could work out if the engine started and idled OK in its present condition…
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