There's nothing wrong with that No. 4 piston that a little JB Weld can't fix.
Seriously, though, don't stop labeling and organizing, even the parts that you know can't be re-used. More than once, I've gone back and examined defective parts to determine why a failure occurred, and having the relevant parts identified and available has been useful. My SOP is to keep everything until the project is back together and operable, and only then scrap the unusable leftovers.
I fully agree with Storm's advice about finding a "reliable, honest, and experienced machine shop". I'd add two things: first, find a shop that wants to work on something unusual like these old Chrysler flatheads. Some shops are production places, and if it isn't a Chevy small block, it's the odd duck out and gets treated as such. I use a guy who does race engines and antiques, and I could tell by the look on his face when he first saw the T245 block I dragged in that I was in the right place. He
wanted to work on it.
Second, learn as much as you can about engine rebuilding before and during the process. Don't just rely on the machine shop to know what to do and how to do it. It's like a medical procedure; you want the best expert(s) to do the work, but you'll end up with a better result if you're involved and knowledgeable about what's being done. For example, I wouldn't spend a dollar on rebuilding an engine if it wasn't going to be balanced, but not all shops think it's worth it, especially on an old flathead like these.
Unless the parts are pitted, don't worry too much about the surface rust. At least not until the parts are cleaned up. The shop will likely thermal clean them, and then you'll know what you've got to work with.
Did you look at the backside of the connecting rod and main bearing inserts that you removed? If the crank bearings have previously been ground undersized, the bearing shells should be marked with the undersize amount.
As for the valve spring compressor: something like this works well on these flatheads:
http://www.ebay.com/itm/Vintage-Clark-F ... 66&vxp=mtr
“When a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, IT IS THEIR RIGHT, IT IS THEIR DUTY, TO THROW OFF SUCH GOVERNMENT...” -Declaration of Independence, 1776