Jeff,

Sounds like the bottom end is going to be ok, but definately have valve issues.
Can't really tell the condition of the sealing surface of the valves until they are out. Receeded and or out of round is not good that's for sure. Color, I think is tough to say.

Manifold nuts - Consider changing the studs and nuts with new ones. For the cost, there's a good chance that's one less headache.

Surfaces - Clean, clean, clean. I usually just scrape with a razor. When doing the top of the block, I use a razor and have the hose of a running shop vacuum right next to the blade to suck up anything. You should avoid having the scrapings fall into the cylinders. Me, I don't use any gasket sealer. If the surfaces mate properly you shouldn't need it.

One other thing, while you have the straightedge out, put it across the manifold. You may find that the surface has warped some over the years and will have to be trued. Now would be a good time to have it re-surfaced as well. Did you get the exhaust flange nuts off ok? May want to consider renewing those as well.

--
'60 544, '68 220S, '70 145S, '72 144E, '86 745T