Hi Frank,
No it's just bored. The round marks at the top of the cylinders were left by the fire rings on the head gaskets. Looking at the specs for the iron block M117 the deck height I ended up with is in line with specs but the iron block engine uses a much thicker head gasket and I am using a thinner 5.6 head gasket.
The machinist honed it tight so the pistons would not rock when I measured the deck height. The piston fits but is very snug. I bought 2 5.6 engines to get 8 pistons the same size-some were 0, +0, 1, 2. I ended up with 8 "1" size pistons which are the standard size.

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Tony H
W111 280SE 3.5 Coupe
Manual transmission

Past cars:
Porsche 914 2.0
'64 Jaguar XKE Roadster
'57 Oval Window VW
'71 Toyota Hilux Pickup Truck-Dad bought new
'73 Toyota Celica GT