If I was going to go that far I would just replace it with a known good 360, but I considered the part about the particles like you mentioned as well as the oil filter part.
The oil looks ok without any sparkly or sheen to it at all and does not look like it was just changed or anything, so I figured if I could fix it for less than a few hundred I would go that route.
It also didn't smoke or anything when we brought home (just missed real bad) but it had close to equal compression on all 8 and decent oil pressure.
That said, I still have to see what the heads gaskets and valves look like to decide.
Rather than dump more than a few hundred into fixing a 318 I'd rather just replace the engine, due to exactly what you said.