Travis, its been a long time since I learned the engine condition check tips, probably well over 50 years
.
If I even "suspect" an engine that I am not familiar with I either pass on it or throw time and money at it making it right the first time. When buying a used or even rebuilt engine listen carefully to what the person says and/or doesn't say also.
A couple of other things to check that I missed the first time:
Blow-by (checking the rings for wear/sealing and valves for seating and being bent): I was going to post a URL/video but a quick check didn't do the job as most of the stuff was either stuff or partly stuff.
To check an engine we used an adapter (quite often home made using a fitting and a spark plug base) that screwed into a spark plug hole that would allow a compressor hos to be connected. When you add air you listen at the intake port and exhaust port for leaking air (both valves have to be in a closed position during the check) and also check in the crank case vent for air flowing out of it (checking for the rings sealing).
Another way to check the rings was to do two compression checks; the first one would be a "dry check" which is your normal compression check. For the "wet check" you squirt some oil into the cylinder then repeat the first check (you could do both in the same hook up but I don't recommend it). The second one you do the squirt into each cylinder individually rather than squirt oil into all the check each cylinder. Write down the numbers for each cylinder both dry and wet values: for future reference, 10% is usually used if I remember correctly.
Also make sure that the engine vent tube is not blocked by either damage or caked on crud and corruption inside of the tube when doing the crankcase check.
Honing the barrels could be OK assuming they are not worn excessively nor out of round. The same for the pistons and inspect the ring lands carefully.