Hi Charlie,
I can see the slightly uneven coloring on the exhaust valve. I’ve attached a poster that’s helpful in diagnosing exhaust valve problems. The poster suggests that an uneven ness is the first stage of the burnt exhaust valve process. What does the compression numbers show? Can you hear hissing from air escaping past that exhaust valve during a compression test??
I believe I’d take more borescope pictures of that valve, and compare it to additional pictures taken at annual or 100 hour intervals. I would probably do the first additional photo after 50 hours.
The cylinder wall rust is unacceptable. Since it’s at the 9 o’clock position, that seems to indicate that the engine was in a prop shaft up position at one time; as it seems as though this is the only position that a cylinder on a built up engine would have that position exposed to moisture. Typically, engines are built with the crankshaft flange down while mounted on an engine stand.
I feel that the #3 cylinder has to come off and that you should apply to warranty relief from Superior (Millennium) or the engine builder.
Thanks for asking.
Please let me know what you decide.
Steve