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Don't you have consumer protection laws in NZ? You surely should have a comeback against the seller of the engine, rather than the installers? Doesn't look as if that engine has run for a LOOOOOOONG time?
If money is the issue, (& who isn't it for) then I'd pull the valves & have a good look at the seats to see if there are any cracks which WOULD scrap the head. If not then I'd check how much warpage there was - there probably is some if the gasket had been blown for so long. Again if not too bad to be skimmable, I'd take a deep breath & get that groove filled with TIG welding, then get the whole head skimmed just enough to get flat. While in the machine shop get them to recut the valve seats, cross your fingers & refit the head - shouldn't cost too much if you have already laid out a pile for the engine. - What's the rest of the engine like BTW - bores in particular given the rust in the head, , bearings & seals? Good luck...
 

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That flag is an Aussie flag. And you also know this by 'online interstate '. We don't have interstate in NZ. The condition of that head says it has not worked in a very long time. Nor was it a running engine. The words 'ripped off' come to mind. If you are certain that you have no come back from the seller (unless Aussie consumer laws can help) then your best bet is as pycoed suggests.
The head looks like it was part of an engine that has been lying around somewhere for a long time and the seller either knowingly, or never bothered to check and just made an assumption, sold you a bad engine. I would be looking carefully at the description he ordered the engine from. The Aussies generally are not too happy with people who knowingly rip other people off.
Oops sorry - the flags are very similar especially at the size shown in the sidebar. I did have a thought about "states" too & took a guess. Mea culpa - I know it rankles - I've been decribed as English a feew times online:eek:
 
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