My block/pistons look a little worse for wear and engine is burning oil as soon as its warm... I can only assume that its related. But I think the current block will only be good for boring out (and if going that route... bigger pistons and more displacement sounds like the way to go!) or maybe inserting new liners if they're available?
I assume aircooled pistons would be fine in a water cooled engine and are generally tougher.