Cam/Head Swap Disaster.......

To get the water out of the oil passages and engine, I would:

• Pout 91% isopropol alcohol down through the valley openings and the heads to clean out the pan as much as you can. Alcohol will absorb some of the water and is cheap. Then follow with a diesel fuel flush in the same fashion to clear out the alcohol, and put in some lubricant for the next step.
• Put in a cheap very light weight oil, like a 5W-20
• Pull the distributor and run the pump with a drill for at lest 30-40 seconds
• Slowly turn the engine about 10 degrees at a time and run the drill 30-40 seconds at each stop. This is to get all the passages to line up and flow oil at some time in the rotation: head oil passages, crank passages, etc.
• Do this for 2 complete rotations of the crank
• It'll be tedious and very time consuming. And if it was me, I'd do this process TWICE with cheap oil.
  
• The one thing this will not get out is water in the lifters. So I'd pull them, tap them upside down on a block of wood to try to knock the cruddy water/oil mix out of them. Then relube the cam and lifters as part of this.
  • If you kept your old cam and lifters in order, then I'd also be tempted to re-install it now as it is broken in, and you won't risk destroying the new cam as you get the last of the water out. Some stops in the new cam break-in process (to change oil again and again as described below) normally do not destroy the cam especially if the springs are not very heavy but it is still risky IMHO to keep the new cam in there.
• Fill with 10W30 and run that 5 minutes, then drain and refill and run for 10 minutes and drain, refill. I'd be changing oil pretty frequently for a while, watching for any milkiness in it.

BTW, just a thought on the pressure blowing past the filter seal: if the water in the oil got heated enough in the pumping process, it might turn to steam and then the pressure out of the pump and into the filter would shoot way up. I personally would just assume that some odd process like this occurred and getting the water out will fix it. When you prime it next time, then make sure you have a mechanical oil pressure gauge installed; that may tell you if the relief valve is stuck closed, if the drill can spin the pump fast enough. It ought to relieve pressure around either 55 or 72 psi. If the pressure is way high, then you can take off the pan and look into the pump, but a stuck relief valve is not common.

Aren't cars fun !??!