As Alex said, that engine doesn't look too bad - the valves look great, even on no. 4 cylinder. It's just been sitting outside way too long. Keep soaking all four cylinders but don't force it free... eventually it will loosen up then you can pull it and strip for a decent inspection. If the bottom end is good, then you might get away with a simple honing or if not, a 1st oversize bore job.
I wouldn't recommend that 350 for your vehicle. You might get away with a small V-6, but either one would detract from its restored value. Work with what you have - it's all you really need.
