Am I a Dumbass or what

I agree..... clean the surfaces and start with a fresh set of head gaskets.

And I for sure would not put that head back on a new engine build that I cared about without putting a Helicoil in the damaged hole. 1/2" of threads in the bottom is not gonna work that well. The gap between those bottom threads and the top of the hole is gonna let the bolt angle around and worry at those threads at the bottom of the hole.

I'd drill it all out and put in a full length Helicoil. You can get 3/8" helicoils from 3/8" to 1-1/8" long: HeliCoil | HeliCoil Drill Sizes | HeliCoil Drill Chart | HeliCoil Specs | HeliCoil Data | HeliCoil Inserts | HeliCoil Screw Thread Inserts | HeliCoil Thread Repair Kits | HeliCoil Tools | Recoil

Of course, you are going to have to tap new threads in the hole for the Helicoil...... easy to read up on tapping into cast iron.