Here's my armchair post mortem eval.
The #3 valve wasn't the only one that was bent during the cylinder cover installation event, the exhaust on #1 one also bent, but not as bad as #3, allowing the valve to seal for the compression test (stem bent on the spring side).
When the head got to operating temperature and the metal swelled, the #1 exhaust valve seized in the guide, open. Piston came up and smacked it enough times to break it off... where it banged (hammered) around and mashed the spark plug and the soft aluminum threads gave way. The holed piston means the lower end is now contaminated, and without a strip down and cleaning, it's future seems dim, too.
I had this happen to my airplane engine (from a different cause). The valve tulip broke off the stem (sodium filled valve stems). I was "lucky" the valve mashed into a U shape and found the exhaust port and lodged in the muffler before the piston crown was holed. This saved the lower end from needing an overhaul, making a $15,000 repair only $1500 to get it flying again. I still have that piston and valve out in the garage as a memento. But, the memory of the engine shaking the plane so bad that the wing tips were flexing up and down a foot is still pretty vivid.
For your replacement options, any CB550 engine will drop right in place on your frame. I think you are better off replacing the whole unit, all things considered. (Just trying to limit your suffering.)