What tools needed for engine rebuild?

After you acquire the basic hand tools, engine stand, cleaning supplys, and set up a very clean area to work, you can look into specialty tools. Butcher paper would be great for covering a work bench. Newspaper can do in a pinch. I can't say enough about cleanliness. Buy A set of bore brushes and out side brushes for cleaning the block.
Feeler gauge, ring end gap grinder. Thread chasers, for cleaning threaded holes in the block. Torque wrenches. These don't have to be fancy. I have an old beam type that works well and never needs calibration. Bolt stretch gauge for doing rod bolts. Dial bore gauge and outside mikes for accurate checking of bearing clearances and bearing bores. (never trust anything, I found .0005 difference side to side on my main bearing bores AFTER I had it align honed. That is why I was getting errant readings on bearing clearances)
Degree wheel and dial indicator for installing the cam. Depending on rod type, either rubber tube to go over rod bolts while installing, or plastic covered (or brass threaded) rod that can thread into H beam style rods to save the crank when you install pistons. Ring compressor. I have one with an over center lever that works great. I can't stand the old band type.
This is what I can think of off the top of my head. Oh ya, a bottle of 409 spray cleaner for cleaning your hands, and paper towels.
The more of these tools you have, the more accurate will be your checking, obviously and the better the chances of nothing being wrong. Take time to learn how to use these tools also. There is a feel for using mikes, and ALWAYS measure at a standard temp for all parts. This is very important up hear in the great white north. A cold crank will measure small,,,, you get the idea.