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Dear Metallo,
For issue #1 - still unanswered. Prior to dismantling the head there was no attempt to visualize for any coolant within the cylinder. Also no attempt to take out the spark plugs to look for coolant wetting the plugs.
Lets not dwell on the past. The evidence of steam cleaning for pistons 1, 2 and 3 is convincing enough to say some coolant did leak into the cylinders.
For issue#2 - the soot tracks on the cylinder head is how the combustion gases got into the coolant channels and causing high pressure. I could see no other source of high pressure for this engine (ie. not from the turbo, cracked cylinder head (I don't see any), clogged cat converter, et cetera)
Volvo could be thinking the rough start and high pressure were two separate events. With the head already dismantled you're in better position to evaluate this than Volvo. Connect the dots (ie. the two events together)
Rest assured just carry on with the job IMHO (ie. cleaning surfaces, valve lapping, new valve seals, new headgasket)
After all cleaning done, re-evaluate the cylinder head and block for any cracks (just to be sure). Check for any warp (straightness) while you're at it.
Amarin.
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