I've also been curious how the Voodoo 702 would run in an engine like this. Something I may try in the future.
For the OP, I think anyway you slice it, you'll need to deck the block anyway if you're going for a proper rebuild and want things square. I guarantee it's going to be off on one end or the other. How much you want to deck it though is going to determine the route you take. I personally wouldn't start with a piston .040 in the hole though. Which means new pistons requires a rebalance of the assembly. And before decking the line bore needs to be checked and honed.
Kind of got backed into a corner with pistons in the hole that far. One way or the other, even if just replacing pistons and getting them closer to deck, then a rebalance and call it good enough, it's going to be a spendy fix, and the block still won't be square.
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