That brown sludge looks more like never having the coolant changed than any type of sealer. If this motor goes back together, on the block side clean out the coolant holes / slot between the cylinders.

This was not run with a coolant to cylinder leak very long, the combustion chambers in cyl 3 and 4 are still way to dirty. Given the pictures I'd say a sudden coolant to cylinder leak cause compression to go high and preignition to nibble away at the piston tops only in the quench areas. ( Quench is an area where the piston comes up to the cylinder head and nearly touches, this action stirs the mixture in the combustion chamber. ) This is only if the rod bearings are good on cyl 3 and 4.



Looking at the head, cyl 2 and to a lesser extent 5, they are running rich / drippy injector.

For my push on the piston test to be valid you must turn the motor so the piston is headed down the bore ~ 1 1/4" the push down on the piston. Checking at TDC will only pickup the bearing being completely hammered out.

Since this is your car and not a customers, putting it back together if rod bearings are good is an acceptable risk. The only other risk would be loss of piston ring tension from overheating leading to oil consumption. All it costs is a couple of gaskets and time to give it a try.