I'm with Keith on this one, that really doesn't look that bad.
When they are installing a new valve seat and have the old one out (or
when the old one is still in and they can 'nick' away at it without
worrying about damage) a good machine shop will smooth that out. Having
rebuilt a VW and had the unfortunate experience of dropping a washer
into the intake while it was on the bench, and having it chopped up and
mashed into a new set of heads, the machine shop smoothed the head and
piston crown so that, as they said, 'there wouldn't be any pre-ignition
from the unsmooth area overheating and becoming an alternate ignitor for
entering fuel'. As far as the piston, 0.5 mm is only .020", any experts
know how thick a std piston crown is? (Hey Victor, I bet you have one
you could measure REAL easy!) It looks like a little smoothing so that
the transition into and out-of the damage is gradual would get you back
on the road the easiest. Doing that grinding while it was still in the
car would be a challenge. Better go see Mike... Fergus O, with the 17
cent advice, HB, CA
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