Cylinder bore is scratched up!

Do not use sandpaper. Most abrasives will break down and leave material behind so you have to be very careful how you attempt to clean it up. A good crocus cloth that has the abrasive bonded to the base cloth material is probably the safest if you are gonna do something like that.
I think I’d leave it be and just get the crust off and run it if you’re adverse to boring it. If the others are good you could just fix the one cylinder.