I picked this up today. Two spark plugs were broken and it has had some water ingress above the pistons. The block looks pretty shagged around the valves. Is it possible to re-sleeve the valve area?
Yes. A machine shop can put in new valve seats. I had it done on my engine in 2010 and they make a great deal of difference. Jim Patrick
Before all just clean the rust out with a steel brush on an angle grinder and a hand drill and a lot of patience. The valve seats can be cleaned up and as Jim said, a machine shop can set in new seats.
Two years ago I had about the same kind of engine.
This is what I did: the engine is running great with only new valves and new piston rings. it needed just a real clean out and some patience.
YES as we did one definitely worse than yours a while ago.