Small engine trouble

If the cylinder isn't banged up it'll be fine.
Being a small engine I don't think I would even bother trying to clean up the top of that piston.
I would pay attention where this spot is damaged though, as it looks like the screw got into the compression ring area a bit.

The cylinder looks good. I didn't see any damage at all inside. The part that you circled is about a business card thickness inside the gasket sealing surface. I noticed that spot right away and checked it with the gasket. The gasket was undamaged as well.