Re-hone or New Rings?

I'm of the opinion that if you're not going to bore/hone and replace the pistons then keep it simple. I use green scotchbrite wrapped around my rigid stone hone and WD40 rather than a dingle ball or having the shop hone it. Then run moly coated rings. Plain iron rings will need a rougher finish to seat to. The piston ring lands are also worn, and the seal against them is as or more important than the wall finish, so you're already limiting yourself running those. Especially with a turbo I'd expect to see a bit of blow by. You might help yourself by adding .003-.004" more on the 2nd ring gap given the top ring isn't going to seal as well.
On the thrust - depending what the package makes for power, that factory convertor is probably ballooning. You need a better convertor.