What is the state of the cam chain and tensioner assembly? You need to find the root cause of the interference problem. The rubber rollers on the tensioner, especially the big one, tend to go bad in a pretty serious way. Also check for badly worn cam sprocket teeth.
Also, is the cam stock? It's pretty quick to measure base circle and lobe height, your manual will have the stock specs.
I'd guess this motor was overheating maybe, from the state of the head gasket? I believe repeated extreme heat cycles can make them go out-of-round line that.
I think there's a good chance that the grinder marks you're seeing are from the factory. Line workers apparently did hand cleanup work on the castings and they didnt always do a great job.
mystic_1