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OK, I just saw the pictures, didn’t see them when I first responded. So review again just what was making the engine difficult to pull over… Were the pistons rusted to the cylinder walls, stuck rings? Quite honestly, I don’t see that much damage on the rod bearings that would cause the engine to bind up as you describe. Keep in mind that this is no chevy small block V8, it will run just fine with many imperfections. I wouldn’t worry about the wear to the lower crank journal. Was there slop in the rods? I’m thinking that most engines of this type when pulled down will show some wear to the rod bearings. Like Frank says, I’m thinking that crank will clean up OK, but you do want to measure the journals after you clean it up. Now that it is apart, you should replace the rods. The wrist pins fit tight on one side of the piston bores, the loose side has an “L” stamped into the casting below its piston bore. I know it seems counter intuitive, but the wrist pins should be pressed out from the loose side through the tight side, then reassembled the same way, from the loose side pressed into the tight side. A decent pressing cradle can be made by cutting the appropriate size hole/piston diameter through a 2×4 so the piston skirt is properly supported while pressing the wrist pins out then back in. Not taking care while changing the rods could distort the piston skirts. I guess you should begin by honing the cylinders lightly then checking ring end gaps in a few areas of each cylinder before spending money on new rods. You have already come this far with its original powerhead, so I would rebuild what you have if you feel capable. Once again, chances are pretty good that a used powerhead will have some wear on the rods…
After rebuilding it is so important to adhere to the factory recommended oiling ratio of 16:1, ignore all the hype about today’s improved oils allowing less oil to be used. These engines hardly smoke at all, even at 16:1. Cutting back on the oil is the best way to damage the rod bearings on this engine, along with improperly an assembled lower seal assembly.
Before you get too deep into this project, is the gearcase in good shape? Was the oil clean and free of water when you drained it? If not, plan on pulling the gearcase apart as well to inspect and reseal it. It will surely need a new water pump impeller if that has not been replaced already.