2 cent theory: looking at the piston there was no major damage to the piston top. More like shot peening going on inside the combustion chamber. A steady hammering would have resulted in damage to the rod journal of the crank. My guess is that the main bearing ran out of oil, allowing the soft bearing material to heat up to the point of becoming a semi-solid, which plugged up the oil feed hole from the block, which starved the feed hole in the crank going to the rod bearing. And actual melting of the bearing took place at some time. Note that this wouldn't happen with the old Mopar bearings which are mostly soft steel with a coating of copper and then a thin coating of a soft gray alloy material that rides against the crank.
To be honest, you're sitting on a pile of junk. A .040 over block that needs reboring and oil passageway complete cleaning, a set of heads that dropped one valve seat already, a crank that is .040 under, and other possible unknown problems. I'd buy a 1973 or later 318 from a car or pickup truck with a carb. Then change the timing chain, and run it. While your engine has been a great educational tool, it might end up being a money pit.