I visited the shop yesterday to see what was going on and discuss some of the topics brought up in this thread.

The mechanic had the head off the engine and had disassembled it with a representative from the machine shop present. The mechanic showed me the head and we looked at the engine. There were no signs on the top of the pistons that would indicate they had been hitting the valves. The piston tops were a smooth almost semi-gloss black.

The #3 exhaust valve moved freely up & down. This is the valve that had the shattered lifter (the lower portion of which was jammed in the cylinder head). The #2 exhaust valve (I believe) was bent slightly (preventing it from moving easily) and its lifter had some light scoring (on the top). The cam broke in two places (both breaks near the damaged cylinders).

I don't believe all the valve components were replaced during either rebuild. I did request and received an new cam chain for the second build. Lifters not involved in the damage appear to be in good condition (no scoring on the sides or top).

So far, no word from the machine shop. The mechanic swears he checked and double checked everything (especially on the second build) and can find no errors in his work. He also said if he could see anything wrong with the work done by the machine shop, he'd point it out. I'm dubious concerning these last two observations. So far I'm being told the lifter failed, really bad luck.

I again mentioned the "tapping" noise the engine exhibited from the day I picked it up. But this is pretty much being ignored. Maybe someone out there can help concerning this noise. It sounded much like a loose tappet but seemed to come more from the lower portion of the engine than from the valve cover. It was barely audible from inside the car and was best heard by rolling down the window and driving past something that would reflect the sound back at the car (a building, jersey curb barrier, etc.). It got louder under a load but never sounded like a real problem until seconds before the failure. It was nearly inaudible at an idle.

Also, I'm assuming that if the valves came in contact with the pistons, there would be obvious marks on the pistons, right?

Thanks for every one's input on this. I'll keep updating this thread with my tale of woe.