273HP, boat anchor or?

I purchased a 67 Barracuda early this year. It had been stored for a long time in a damp place. The 273HP was and still is seized, the cylinders contained lots of Marvel Mystery oil. I pulled the engine and transmission last week then pulled the heads. There is rust everywhere but #2 & 3 have more rust than the others. #3 has a broken valve but no marks on the piston while #2 a frozen open exhaust valve. The cam appears scored but lifters and pushrods all turn and appear to be ok. The top of the engine appears OE and complete, carb, linkages and brackets, air cleaner, valve covers, intake and exhaust manifolds, distributor, etc.

I know very little about this car other than where it has been registered and that it was stored for many years. I'm at a loss to guess how the engine got the way it is. I'm planning to go GenIII hemi so I don't need this engine or it's accessories but thought maybe it would be best to ask for opinions before I do something (stupid).

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