Hi Jeff,
Well that's a bummer....
Do you think that maybe that engine is a takeout, that was placed in the shipping crate that the new engine came in? Or maybe some swapped heads on this engine while in the crate at some point in the past?
It seems very unlikely to me that a depot would attempt to use a repaired cylinder head during rebuild.
As you know, you probably want to thoroughly go over the block before you use it. I bolted a piece of wood to the deck with a thin piece of rubber to act as a gasket and sealed of the water pump passage in much the same manner. I then pressurized the cooling passages and covered every surface with soapy water, looking for bubbles - luckily none were found.
Also, prior to machine shop work, I had them magna flux it, just to be double sure.
Would be interested to know what you find....