What is this and why would it be there?

As has been said before, don't mess with the Glue.
Run it! injoy it! And start with the original, with a spun bearing.
I wouldn't trust his words either.
Look it over closely and have it pressure tested before you start the build one the original block
Pressure testing is cheap if you haven't already sunk a ton of money into it before you fine a problem.

As far as the push rod grooves. they didn't come from the factory like that.
My Hyd Roller didn't need them grooves and but if i was running some monster roller the required high pressure valve spring. THAT would have required Larger push rod tubes......them pushrod groove would have been necessary. just my opinion.