The cross hatch angle should be around 30 degrees. I still see vertical scratches in the bores too. You mention the bores are still 86mm. What is the difference, from a measurment inline with the crank, and at 90 degrees to it? Be sure to also measure near the top, halfway down, and at the bottom of the stroke. You will find a difference, in diameters, and at each of the three locations from top to bottom. There is a specification for the amount of elongation of the diameter, and the taper from top to bottom. Check the service manual.
The cylinder block deck still looks pretty rough, and would need cleaned up prior to installing the cylinder head. Have you measured it for flatness? I believe the allowance is something like 0.003".
How about the cylinder head? If the lower end is an indicator, the head will need work as well.
As Zed mentions, how many times do you want to pull the engine and disassemble it, and how much money do you want to spend before deciding that a proper rebuild would have been the better way to go initially?