I also posted this question on ChevyTalk, and Gene Schneider, who worked in dealerships from the time he was 14 until he retired, and who was a Chevy Parts Dept. Manager for many years, posted the following reply. I add it here as it gives some good information.
Posted by Gene Schneider:
"The first truly balanced Chevrolet engine was the 1955 8 cylinders. They were "spin" balanced after assembly.
The 6 cylinder engines were balanced by select weighing of parts that went into one engine. A select set of rods,pistons, etc. would be put into one block. The crankshaft was balanced by its self before assembly. Same with the clutch and flywheel. This was all done to about a 1/2 ounce - give or take. Due to the heavy weight of the rotating parts of the 6 cyl. engine the 1/2 ounce would be a very slight amount of unbalance.
If the engine was installed as a complete assembly (with head,pan, oil pump, water pump, rocker arms and valve cover) it would have been painted.
What we called short blocks (no head,pan, oil pump, lifters) would have been unpainted. Or if it had a problem under warranty a block only would have been installed (no lifters,etc). Thats why I doubt if the engine was a warranty exchange unit. Also the warranty parts had to be returned to the Chevrolet Warehouse for inspection. In the later years the Zone Service Rep. would inspect them at the dealership and he would take a sledge hammer and make a hole in the side of the block. This happened to about 90 percent of the warranty engines. If he didn't show up in the 60 day time frame we were supposed to destroy the engine...I think we may have hid a few.
Once a part is replaced in an engine, say one piston or one conn. rod it could be farther out of balance. Same if the pressure plate is replaced. Its no longer perfectly balanced to the flywheel.
Just drive it and don't worry. I am sure that there were millions of 216-235 and 261 engines out of balance by more than an ounce and lived a long life. That was the advantage of the generous main bearing surfaces and a heavy flywheel."
