Having bought and worked with may fire damaged vehicles, that burn doesn't look bad at all. If you're going to take it apart and rebuild it, you should have no problem with the basic long block. The intake, throttle body and many of the accessories might not be any good however. The valve covers should be steel and will probably survive if you can bead blast them. If you are thinking to get it running the way it is, I'd check for water and any other firefighting stuff inside the engine before I tried to fire it up.
