What was the compression on the clyinder shown??? How much of a ridge is there on the clyinder wall??? If there was no ridge I would just hone tha clyinder, putting the piston down to the bottom of stroke and making sure to clean the clyinder very well when done. If there is a ridge you would need to remove ridge first or you will probably break the hone when hitting the ridge. I am not sure if you can get a good crosshatch with the piston in the block being the stroke would be shallow. Since you say all clyinders still show crosshatch it may not be worth the effort, but then it may at least remove the glaze on the clyinder wall.
Was there any coolant in the oil????
Are you replacing both heads or just bank 1 head, either way have both heads tested for cracks and warpage so you dont have problems after reassembly.